Understanding Income Tax Deductions for a Salary of Rs. 45 Lakhs per Annum

Introduction

Calculating the income tax deduction for a salary of Rs. 45 lakhs per annum involves understanding the current tax slabs and applicable deductions. This article aims to break down the process with detailed steps, providing clarity to those in the same financial position.

Tax Slabs for FY 2023-24

The New Tax Regime Slabs for FY 2023-24 are as follows:

Income Range Tax Rate Up to Rs. 2.5 lakhs Nil Rs. 2.5 lakhs to Rs. 5 lakhs 5% Rs. 5 lakhs to Rs. 7.5 lakhs 10% Rs. 7.5 lakhs to Rs. 10 lakhs 15% Rs. 10 lakhs to Rs. 12.5 lakhs 20% Rs. 12.5 lakhs to Rs. 15 lakhs 25% Above Rs. 15 lakhs 30%

Calculation of Tax

Income

Annual Income: Rs. 45,00,000 (Rs. 45 lakhs)

Tax Calculation

Up to Rs. 250,000: Nil Rs. 250,001 to Rs. 500,000: 5% of Rs. 250,000 Rs. 12,500 Rs. 500,001 to Rs. 750,000: 10% of Rs. 250,000 Rs. 25,000 Rs. 750,001 to Rs. 1,000,000: 15% of Rs. 250,000 Rs. 37,500 Rs. 1,000,001 to Rs. 1,250,000: 20% of Rs. 250,000 Rs. 50,000 Rs. 1,250,001 to Rs. 1,500,000: 25% of Rs. 250,000 Rs. 62,500 Above Rs. 1,500,000: 30% of Rs. 3,000,000 (45 lakhs - 15 lakhs) Rs. 9,00,000

Total Tax: Rs. 12,500 Rs. 25,000 Rs. 37,500 Rs. 50,000 Rs. 62,500 Rs. 900,000 Rs. 1,087,500

Additional Considerations

Cess

Health and Education Cess: 4% of Rs. 1,087,500 Rs. 43,500

Total Tax Payable: Rs. 1,087,500 Rs. 43,500 Rs. 1,131,000

Additional Deductions

For a salary of Rs. 45 lakhs per annum, additional income tax deductions include:

Standard Deduction: Rs. 50,000 Leave Travel Allowance (LTA): Rs. 1,60,000 Medical Insurance Premium: Up to Rs. 25,000 for self and dependents Provident Fund (PF) Contribution: Up to Rs. 2,16,000 Employees State Insurance (ESI) Contribution: Up to Rs. 24,000 National Pension System (NPS) Contribution: Up to Rs. 1,50,000 Home Loan Interest: Up to Rs. 2 lakh Donations to Charitable Institutions: 10% of the adjusted total income

It is important to note that these deductions can reduce the taxable income and consequently the tax liability.

Conclusion

The income tax deduction for a salary of Rs. 45 lakhs per annum is significantly affected by the applicable tax slabs and deductions. Understanding these components is crucial for accurate tax calculation and planning.