Income Tax Slab: Salary Above 10 Lakh? You Can Save Rs 18,200, Not Just Rs 17,500. Here's How

Finance Minister Nirmala Sitharaman provided significant relief to the working class through revisions in the new tax regime in the Union Budget 2024. Under the revised income tax slab, individuals earning between Rs 10 lakh and Rs 50 lakh will experience reduced tax burdens, resulting in substantial savings. Following these adjustments, discussions indicate that those with incomes exceeding Rs 10 lakh could save up to Rs 17,500 in taxes.

The announcement has spurred millions of taxpayers across the country to seek advice from Chartered Accountants for further clarity. For those perplexed about tax deductions, it should be noted that individuals earning over Rs 10 lakh annually could potentially save Rs 18,200, not Rs 17,500 as initially speculated. However, the actual amount saved will depend on the tax regime chosen and the nature and amount of investments made. Allow us to elucidate the complete calculation of your income and tax obligations.

Tax computation for individuals earning more than Rs 10 lakh

Under the revised tax slabs and increased standard deduction in the new regime, individuals with incomes of Rs 10 lakh or more were initially expected to save Rs 17,500 annually. However, it turns out that the reduction in health and education cess also contributes to this savings. This adjustment amounts to an additional Rs 700 (4% of Rs 17,500), bringing the total annual savings to Rs 18,200.

If your annual income falls between Rs 50 lakh and Rs 1 crore, you will save Rs 1,750 (10% of Rs 17,500) on surcharge, resulting in net savings, including cess, of Rs 20,020. For incomes between Rs 1 crore and Rs 2 crore, applying a 15% surcharge increases your total savings, including surcharge and cess, to Rs 20,930. In the case of income between Rs 2 crore and Rs 5 crore, excluding dividends and capital gains, a 25% surcharge leads to total savings amounting to Rs 22,750.

Following the adjustment in standard deduction under the new budgetary tax regime, income up to Rs 7.75 lakh is now exempt from taxation. If your income is below this threshold, you will have no tax liability.