Income Tax Above 10 Lakh

Earning Rs. 10 lakhs in India is a significant achievement, but it also comes with tax liabilities under both the old and new income tax regimes. Whether you are a salaried professional or a freelancer, understanding the nuances of income tax above 10 lakhs is crucial to ensure compliance, optimize your finances, and avoid unnecessary burdens. Here are the details of income tax calculation for income levels above Rs. 10 lakhs that will help you file your Income Tax Returns (ITR) in the FY 2024-25 easily.

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Introduction of New Tax Regime in FY 2024-25 (2025-26)

The New Tax Regime, introduced in Budget 2020, was further refined in the 2023 Budget, offering some key changes for the financial year 2024-25 (Assessment Year 2025-26).

NOTE: The government allows you to choose between the old and new tax regime, with the new tax regime as the default choice for filing your ITR in the Financial Year 2023-24.

Key Highlights of the New Tax Regime:

Increased Basic Exemption Limit: The new regime offers a higher basic exemption limit of Rs. 3 lakhs compared to Rs. 2.5 lakhs in the old regime.
Simplified Tax Structure: The new regime eliminates several deductions and exemptions available in the old regime.
Lower Tax Rates for Certain Income Brackets: The new regime has lower tax rates for income brackets above Rs. 5 lakhs compared to the old regime.
For Example: The tax rate for income between Rs. 5 lakhs and Rs. 6 lakhs is 5% in the new regime compared to 20% in the old regime.

In order to calculate the income tax above Rs. 10 lakhs, you need to understand the tax slab rates for the Old vs. New Income Tax Regime. This will also help you to decide the tax regime for you while filing your Income Tax Returns (ITR) or paying the Tax Deduction at Source (TDS).

Income Tax Slabs under Old Tax Regime and New Tax Regime in FY 2024-25 (AY 2025-26)

The following table helps you to understand the income tax regime for Financial Year 2024-25 and learn the tax on Rs. 10 lakh income and above:

Income Tax Slab	Income Tax Rate (in % p.a.)
	Old Tax Regime (FY 2024-25)			New tax Regime (until 31 March 2023)	New Tax Regime (since 01 April 2023)
	For Individuals/ HUFs/ NRIs (age < 60 years)	For Individuals/ HUFs/ NRIs (age 60 - 80 years)	For Individuals/ HUFs/ NRIs (age > 60 years)	New tax Regime (until 31 March 2023)	New Tax Regime (since 01 April 2023)
0 – Rs. 2.5 lakhs	NIL	NIL	NIL	NIL	NIL
Rs. 2.5 lakhs – Rs. 3 lakhs	5% (Rebate u/ Section 87A is available)	NIL	NIL	5% (Rebate u/ Section 87A is available)	NIL
Rs. 3 lakhs – Rs. 5 lakhs	5% (Rebate u/ Section 87A is available)	5% (Rebate u/ Section 87A is available)	NIL	5% (Rebate u/ Section 87A is available)	5% (Rebate u/ Section 87A is available)
Rs. 5 lakhs – Rs. 6 lakhs	20%	20%	20%	10%	5% (Rebate u/ Section 87A is available)
Rs. 6 lakhs – Rs. 7.5 lakhs	20%	20%	20%	10%	5% (Rebate u/ Section 87A is available)
Rs. 7.5 lakhs – Rs. 9 lakhs	20%	20%	20%	15%	10%
Rs. 9 lakhs – Rs. 10 lakhs	20%	20%	20%	15%	15%
Rs. 10 lakhs – Rs. 12 lakhs	30%	30%	30%	20%	15%
Rs. 12 lakhs – Rs. 12.5 lakhs	30%	30%	30%	20%	20%
Rs. 12.5 lakhs – Rs. 15 lakhs	30%	30%	30%	25%	20%
Rs. 15 lakhs & above	30%	30%	30%	30%	30%

New Tax Regime Since July 2024

Difference between pre-budget and post-budget tax slab

Tax Slab for FY 2023-24	Tax Slab	Tax Slab for FY 2024-25	Tax Slab
Upto ₹ 3 lakh	Nil	Upto ₹ 3 lakh	Nil
₹ 3 lakh - ₹ 6 lakh	5%	₹ 3 lakh - ₹ 7 lakh	5%
₹ 6 lakh - ₹ 9 lakh	10%	₹ 7 lakh - ₹ 10 lakh	10%
₹ 9 lakh - ₹ 12 lakh	15%	₹ 10 lakh - ₹ 12 lakh	15%
₹ 12 lakh - ₹ 15 lakh	20%	₹ 12 lakh - ₹ 15 lakh	20%
More than 15 lakh	30%	More than 15 lakh	30%

Surcharge

A surcharge is a tax over the income tax payable for an assessee falling in the high-income bracket.

Following are the taxable income ranges of old and new tax regimes for which the applicable surcharge rates are:

Surcharge for FY 2023-24 (Assessment Year 2024-25)
Income Range	Surcharge Rates for Old Tax Regime 2023-24	Surcharge Rates for New Tax Regime 2023-24
> Rs. 50 Lakhs to < Rs. 1 Crore	10%	10%
> Rs. 1 Crore to < Rs. 2 Crores	15%	15%
> Rs. 2 Crores to < Rs. 5 Crores	25%	25%
> Rs. 5 crores to < Rs. 10 Crores	37%	25%*
> Rs. 10 Crores above	37%	25%*

*Union Budget 2023 limits the highest surcharge rates at 25% per annum.
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Tax Deductions and Exemptions Available under New Income Tax Regime

Tax Deductions/ Exemptions	Details	Old Tax Regime	Previous Tax Regime	New Tax Regime (Applicable from 01 April 2023)
Income Limit for Tax Rebate	Provided for a specific income limit	Rs. 5 lakhs	Rs. 5 lakhs	Rs. 7 lakhs
Section 87A	100% rebate up to Rs. 25,000 for income up to Rs. 7 lakhs	Rs. 12,500	Rs. 12,500	Rs. 25,000
Standard Deduction	Rs. 50,000 for Salaried Class individuals	Rs. 50,000	NA	Rs. 50,000
Effective Tax-Free Salary Income	After deductions and exemptions on salary	Rs. 5.5 lakhs	Rs. 5 lakhs	Rs. 7.5 lakhs
Standard Deduction on Family Pension	Lower of Rs. 15,000 or 1/3rd of pension amount for Pensioners	Rs. 15,000	Rs. 15,000	Rs. 15,000
HRA Exemption	Applies to HRA allowance for salaried employees	YES	NO	NO
Transport Allowance	Applicable to Specially Abled individuals	YES	YES	YES
Conveyance Allowance	For travel to work or on transfer	YES	YES	YES
Entertainment Allowance & Professional Tax	Deductions on entertainment allowance and professional tax	YES	NO	NO
Perquisites for Official Purposes	Deductions on perquisites paid for office purposes	YES	YES	YES
Section 80CCD(1)	Employee's contribution to the NPS Account	YES	NO	NO
Section 80CCD(2)	Employer's contribution to the NPS account of an employee	YES	YES	YES
Section 80C	ULIP/ ELSS/ LIC/ PPF/ Tax-Saver FDs/ Child Tuition Fee	YES	NO	NO
Section 80D	Medical insurance premium	YES	NO	NO
Section 80E	Interest on education loan	YES	NO	NO
Section 80 EEB	Interest on Electric Vehicle (EV) loan	YES	NO	NO
Section 80G	Donations to political parties	YES	NO	NO
Section 80JJAA	When new employees are employed	YES	YES	YES
Section 80U	For disabled individuals	YES	NO	NO
Other Chapter VI-A Deductions	Under Chapter VI-A of the IT Act, 1961	YES	NO	NO
Section 32	Depreciation on tangible assets (excluding additional depreciation)	YES	YES	YES
Section 24(B)	Interest on home loan for self-occupied or vacant property	YES	NO	NO
Section 24(A)	Interest on home loan for letting out property	YES	YES	YES
Section 80 CCH	Contributions to Agniveer Corpus Fund	YES	NOT EXISTED	YES
Gifts	Up to Rs. 50,000	YES	YES	YES
Section 10(10C)	Voluntary retirement amount	YES	YES	YES
Section 10(10)	Gratuity amount	YES	YES	YES
Section 10(10AA)	Leave encashment	YES	YES	YES

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Illustration of Tax on 10 Lakh Income

For example, Mr Prateek has an annual salary of Rs. 10 lakhs.

As per the old tax regime, the total investments made by him under Section 80C of the Income Tax Act, 1961, is Rs. 1,50,000 under the following options:

ELSS (Equity Linked Savings Scheme)
LIC premium
PF (Provident Fund)
Home loan principal instalment (Home loan interest of Rs. 75,000 has been paid by him in the financial year 2021 – 2022)
Mr Prateek also purchased medical insurance of Rs. 28,000 in his and his spouse's names apart from the Section 80C investments.

Mr. Prateek can claim the above deductions if he opts for the old tax regime, whereas deductions are not allowed in the new tax regime.

Let us understand the tax flow of Mr Prateek in both tax regimes through a table:

Details	Old Tax Regime	New Tax Regime
Gross Income	Rs. 10,00,000	Rs. 10,00,000
Deductions:
Under Section 80C	Rs. 1,50,000	–
Under Section 80D	Rs. 25,000	–
Under Section 24(b)	Rs. 75,000	–
Total Taxable Income	Rs. 750,000	Rs. 1,000,000
Old Tax Slab Regime
Rs. 0 to 2.5 Lakh	–	–
Rs. 2.5 to 5 Lakh @ 5%	Rs. 12,500	--
Rs. 5 to 7.5 Lakh @ 10%	Rs. 25,000	--
New Tax Slab Regime
Rs. 0 to 3 lakh	--	0
Rs. 3 to 6 lakh @ 5%	--	Rs. 15,000
Rs. 6 to 9 lakhs @ 10%	--	Rs. 45,000
Rs. 9 lakhs to 10 lakhs @ 15%	--	Rs. 15,000
Income Tax	Rs. 37,500	Rs. 75,000
Cess @ 4%	Rs. 1,500	Rs. 3,000
Total Tax Levied	Rs. 39,000	Rs. 78,000

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Summing It Up!

The income tax on Rs. 10 lakh income is a crucial aspect of financial planning and fiscal responsibility. Understanding the applicable tax rates and deductions is essential for individuals to optimize their tax liabilities. It is advisable for taxpayers to stay informed about any changes in tax laws and leverage available exemptions to maximize their take-home income while fulfilling their tax obligations.

FAQ's

Is 10 lakh income tax-free?

No, 10 lakh income is not entirely tax-free in India. It depends on which tax regime you choose between the old vs. new tax regime, and whether you claim any eligible deductions and exemptions.
How to avoid tax for 10 lakhs?
It is important to understand that avoiding tax altogether is illegal and unethical. Your goal should be to minimize your tax liability within legal and ethical boundaries. Here are some ways to achieve that with Rs. 10 lakh income:
- Choosing the right tax regime between the old and new tax regime
- Maximizing eligible deductions and exemptions
- Planning your income and investments strategically
How much income is tax-free?
The amount of income that is tax-free in India depends on which tax regime you choose: old or new.
- New Regime:
  - No tax is payable on income of up to Rs. 3 lakhs
  - Income of up to Rs. 7,00,000 is eligible for a tax rebate under section 87A
- Old Regime:
  - No tax is payable on income of up to Rs. 2.5 lakhs
  - Income of up to Rs. 5,00,000 is eligible for a tax rebate under section 87A
How much tax do I have to pay for 10 lakhs?
The amount of tax you have to pay for 10 lakhs (1,000,000 rupees) in India depends on which tax regime you choose: old or new.
- Old Regime: Tax rate on 10 lakhs is 30% p.a.
- New Regime: Tax rate on 10 lakhs is 20% p.a.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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