Summary

It is not mandatory that if one’s gross salary is more than ₹10 lakh, then one’s tax liability will be high. It depends upon the financial position of an individual along with his/her choice of tax regime. This guide covers provisions relevant to salaried individuals for FY 2025–26.

Introduction

Crossing the ₹10 lakh mark alone does not determine an individual’s tax liability. The liability of tax ultimately depends on the effectiveness with which the facilities provided by the Income Tax Act are availed of. In order to make effective tax planning for people with incomes of more than ₹10 lakh, it is essential to understand that effective tax planning for such persons does not depend on fixed deductions.

The Need for Tax Planning

The tax benefit of a deduction generally increases when the taxpayer falls within a higher tax slab. A ₹1.5 lakh deduction claimed at a 30% marginal rate reduces basic tax by a meaningfully larger amount than the same deduction claimed at 10%. Under the new regime, a resident individual with total income up to ₹12 lakh can generally pay no tax due to the Section 87A rebate, subject to conditions.

Timing matters even where the underlying numbers appear straightforward. Section 80C investments and NPS contributions may be easier to manage when made throughout the year rather than concentrated in the final weeks of the financial year. Instruments such as ELSS carry market exposure that benefits from staggered entry rather than a single lump-sum commitment near the deadline.

Understanding Income Tax Laws for High-Income Individuals

For individuals, there is typically an option to choose between the old and new tax regimes every year and the new regime is the default unless a taxpayer opts out of it. The old regime gets a wide set of benefits like Section 80C, HRA and home loan interest. The new regime offers updated slab rates, but it does not provide most of these benefits except for the standard deduction and a few conditional exceptions such as employer NPS contribution under Section 80CCD(2).

An individual with a home loan, substantial Section 80C investments, and HRA eligibility is often more advantageous under the old regime. An individual without these deductions is generally more advantageous under the new regime. This comparison should be reassessed each year, since income, salary structure, and eligible deductions rarely stay fixed for long.

Proven Techniques to Save Tax on Salary Above 10 Lakhs

Claiming every available deduction at once rarely produces the best outcome. A more targeted approach, based on an individual’s financial circumstances and selected tax regime, is generally more appropriate. 

Provision	Coverage	Maximum Deduction, Subject to Conditions	Regime
Section 80C	EPF, PPF, ELSS, life insurance, combined with 80CCC and 80CCD(1)	₹1.5 lakh	Old regime
Section 80CCD(1B)	Taxpayer’s own eligible NPS Tier I contribution	Additional ₹50,000	Old regime
Section 80D	Health insurance premiums	Depends on age of insured; overall limit can reach ₹1 lakh	Old regime
HRA (Section 10(13A))	Rent paid, subject to salary structure	The least of three statutory amounts	Old regime
Section 80E	Education loan interest	No monetary ceiling	Old regime
Section 80G	Donations to eligible institutions	50% or 100%, subject to qualifying limits	Old regime

Combining eligible provisions can meaningfully lower taxable income, but the actual benefit still depends on salary structure and existing financial commitments, and applies where the old regime has been selected.

Utilizing Section 80C of the Income Tax Act for Tax Savings
Section 80C remains one of the most widely used deductions under the old regime. The deduction is capped at ₹1.5 lakh a year and covers eligible contributions to EPF, PPF, five-year tax-saving fixed deposits, life insurance premiums, and ELSS, among other qualifying investments. ELSS carries the shortest lock-in, generally three years, though the equity exposure it involves brings market risk that PPF or fixed deposits do not carry.

The lock-in period alone should not determine the allocation. An individual who requires the funds within a couple of years may find a shorter-term or more liquid instrument more suitable than ELSS. Risk tolerance and investment horizon are equally relevant to that decision.

Taking Advantage of an NPS Tier II Account for Tax Saving
The National Pension System allows a further deduction under Section 80CCD(1B), separate from the Section 80C limit and generally available under the old regime. The distinction between NPS Tier I and Tier II accounts matters here. Tier I is the primary retirement account and carries meaningful withdrawal restrictions, though partial withdrawals remain possible under specific rules. The 80CCD(1B) deduction applies to contributions made to this account.

Tier II generally offers greater withdrawal flexibility, but contributions to it generally do not qualify for the same deduction, government employees being a narrow exception subject to prescribed lock-in conditions. Confirming which account applies before contributing can help prevent an ineligible claim.

Exploring Other Tax Saving Sections and Schemes
HRA, available under the old regime, is calculated as the least of three statutory amounts tied to rent paid, salary, and city of residence. A higher rent alone does not guarantee a larger exemption, since all three figures are weighed together rather than in isolation.

Health insurance premiums under Section 80D also apply under the old regime, with the deduction depending on the age of the insured and rising where senior citizen parents are covered, up to an overall limit of ₹1 lakh. Education loan interest under Section 80E carries no upper ceiling and can be claimed for a defined stretch of assessment years. Donations to eligible institutions under Section 80G may qualify for a partial or full deduction. But cash donations above a prescribed limit and donations in kind generally do not count toward it.

How Professional Assistance Can Benefit High-Income Salary Earners
Tax planning grows more complicated as income rises, since it involves comparing regimes, timing contributions, and tracking which provisions remain available under each regime. Professional guidance proves useful here, especially for individuals who do not have the time or capacity to track tax-rule changes each financial year.

Jainam offers access to tax-efficient investment options, ELSS among them, along with portfolio guidance built around an individual’s broader financial goals. Choosing among investment plans suited to the individual’s goals, available under Section 80C, should not rest on the deduction alone, and platform-level guidance can help weigh that decision against an individual’s liquidity needs and risk appetite, along with avenues for tax savings beyond 80C once that limit has been fully utilized.

Conclusion
Tax planning above ₹10 lakh starts with comparing the old and new regimes, not with automatic investment in tax-saving products. The old regime may be more advantageous where a taxpayer can legitimately claim HRA, home loan interest, Section 80C, and NPS under Section 80CCD(1B). The appropriate choice depends on taxable income, salary structure, and how an individual’s financial goals may change over time.

Final Takeaways

• A gross salary above ₹10 lakh does not automatically result in a higher tax liability.
• The Section 87A rebate can eliminate tax for eligible residents earning up to ₹12 lakh under the new regime.
• Section 80C and Section 80CCD(1B) together extend deductions under the old regime, before considering other provisions.
• HRA, health insurance, and education loan interest remain relevant primarily under the old regime.