Many salaried professionals in India wonder whether earning ₹10 lakh a year can be completely tax-free. The short answer is no. Under the latest income tax rules, including changes introduced in the Union Budget for FY 2024-25, a ₹10 lakh income falls into a higher tax bracket, making it taxable.
However, with the right planning and use of deductions, you can reduce how much you owe. Understanding the tax slabs and comparing the old and new regimes is key to making smart financial decisions.
Key Points to Know
- ₹10 lakh annual income is not tax-free in India.
- Both old and new tax regimes have their own slab structures.
- Deductions and exemptions can significantly reduce taxable income.
- Choosing the right tax regime can save thousands each year.
- Tax policies are reviewed regularly, so keeping up with changes is important.
Income Tax Slabs in India
India’s income tax system uses a slab-based approach, where rates increase with income. For FY 2024-25, the structure is as follows:
New Tax Regime Slabs
| Income Level | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
The standard deduction has been raised from ₹50,000 to ₹75,000. Family pension deduction has also gone up from ₹15,000 to ₹25,000.
Old vs New Tax Regime: Which is Better?
| Category | Old Regime Slabs | New Regime Slabs |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% | 10% |
| Above ₹10,00,000 | 30% | 30% |
On a ₹10 lakh income, switching to the new regime could save around ₹17,500 compared to the old one, mainly due to lower slab rates and higher standard deductions.
Is ₹10 Lakh Income Tax-Free?
No. Under the new tax regime, ₹10 lakh falls into the 15% bracket. Even after deductions, tax liability remains.
Tax Example for ₹10 Lakh Under New Regime
For FY 2023-24:
| Income Range | Tax Rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹7,50,000 | 10% |
| ₹7,50,001 – ₹10,00,000 | 15% |
If you earn ₹10 lakh and claim the ₹50,000 standard deduction, your taxable income becomes ₹9.5 lakh. This results in a tax bill of roughly ₹54,600.
Deductions and Exemptions You Can Use
- Standard Deduction: ₹50,000 for salaried individuals.
- Section 80C: Up to ₹1.5 lakh for investments like EPF, PPF, ELSS.
- Section 80D: Deductions for health insurance premiums.
Using these can bring your taxable income down, reducing the amount you pay.
Final Word
Earning ₹10 lakh a year in India does not qualify as tax-free income. While a rebate exists for incomes up to ₹7 lakh, anything above that is taxable. The key is to use exemptions and deductions effectively.
The old regime offers more exemptions but higher slab rates, while the new regime has lower rates but fewer exemptions. Choosing the right one can make a noticeable difference to your final tax outgo.
Staying proactive with tax planning ensures you keep more of your hard-earned money while staying compliant.
FAQ
Is ₹10 lakh income tax-free in India?
No, it falls into a higher tax bracket and is taxable under both regimes.
How much tax would I pay on ₹10 lakh?
Around ₹54,600 after standard deduction under the new regime.
Which regime is better for ₹10 lakh income?
For most, the new regime offers lower tax, but it depends on your deductions.
Can deductions reduce my tax to zero?
Not usually at this income level, unless you have very high eligible deductions.
What’s the exemption limit in India?
Up to ₹3 lakh under the new regime; rebate available for incomes up to ₹7 lakh.