Which Tax Regime is Better for Income Above 15 Lakhs in India?

Which Tax Regime is Better for Income Above 15 Lakhs in India?

In India, filing income tax comes with the dilemma of selecting the optimal tax regime. This choice becomes particularly important for individuals with annual earnings exceeding Rs. 15 lakhs. Here, we’ll delve into the intricacies of both the old and new tax regimes, empowering you to make an informed decision.

Understanding the Old Tax Regime

The old tax regime offers a tiered tax structure with various deductions and exemptions. These deductions significantly reduce your taxable income, potentially leading to lower tax liability. Some prominent deductions include:

  • Section 80C: Investments in PPF, ELSS mutual funds, life insurance premiums, and more (up to Rs. 1.5 lakh).
  • Section 24: Interest paid on home loans.
  • Section 80D: Medical insurance premiums.

While the old regime provides these benefits, it also comes with a more complex filing process due to the involvement of numerous deductions.

The New Tax Regime: A Simpler Approach

Introduced in 2020, the new tax regime offers a streamlined system with lower tax rates. However, it comes with a caveat – most deductions and exemptions available under the old regime are absent. This includes the popular Section 80C deductions.

Choosing the Right Regime for You

The ideal regime for you hinges on your individual circumstances, particularly the amount of tax-saving investments you make.

  • Opt for the old regime if:
    • You extensively utilize tax-saving instruments like PPF, ELSS, and home loan payments.
    • Your total deductions exceed the standard deduction offered in the new regime (Rs. 50,000).
  • Consider the new regime if:
    • You don’t invest heavily in tax-saving schemes.
    • You prefer a simpler filing process.

Here are some additional factors to consider:

  • Income level: The breakeven point between the two regimes can vary depending on your income bracket.
  • Future investment plans: If you anticipate making significant tax-saving investments in the future, the old regime might be preferable.

Maximizing Tax Benefits

Regardless of the regime you choose, here are some tips to minimize your tax burden:

  • Plan your investments strategically: Utilize tax-saving instruments like PPF, ELSS, and NPS to their full potential.
  • Review your salary structure: Negotiate for salary components exempt from income tax, like reimbursements.
  • Consult a tax advisor: A tax advisor can provide personalized guidance based on your specific situation.


By understanding the nuances of both tax regimes and considering your financial situation, you can make an informed decision that minimizes your tax liability. Remember, there’s no one-size-fits-all answer. Carefully evaluate your options and choose the regime that best suits your needs.

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