No need to do Tax saving Investment under section 80 C when your income is above 15 Lakh.

CA Fatarpekar

30/01/2023

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As we are approaching the end of the fourth quarter of the financial year, we get worried about the big figures from our income being lost to income tax. Under section 80 C of the income tax act 1961, we utilize many tax-saving options by investing the money in some schemes and funds, as prescribed by the Government of India. Read here for some of the tax saving options under section 80 C of the income tax act 1961.

But, did you know? That, if your income is above Rupees 15 Lakh per year, you need not lose your income by investing in options that will save your tax under section 80 C. Well, here is how you achieve it.

If you are planning for any tax-saving investment & your income is above 15 Lakh, understand this illustration about income tax calculation before investment

Tax under old Tax Regime ( Amount in Lakh)

Annual Income	15	16	17	18	19	20
Less : Standard Deduction	0.5	0.5	0.5	0.5	0.5	0.5
Net Income	14.5	15.5	16.5	17.5	18.5	19.5
Less : Tax saving u/s 80 C	1.5	1.5	1.5	1.5	1.5	1.5
Taxable Income	13	14	15	16	17	18
Tax on above	2.02	2.33	2.63	2.93	3.23	3.53
Add Cess 4 %	0.08	0.09	0.11	0.12	0.13	0.14
Total Tax ( A )	2.10	2.42	2.73	3.04	3.35	3.67

Tax under New Tax Regime ( Amount in Lakh)
Annual Income	15	16	17	18	19	20
Less : Standard Deduction	0	0	0	0	0	0
Net Income	15	16	17	18	19	20
Less : Tax saving u/s 80 C	0	0	0	0	0	0
Taxable Income	15	16	17	18	19	20
Tax on above	1.88	2.18	2.48	2.78	3.08	3.38
Add Cess 4 %	0.08	0.09	0.11	0.12	0.13	0.14
Total Tax ( B )	1.96	2.27	2.58	2.89	3.20	3.52

Saving ( A – B )	0.15	0.15	0.15	0.15	0.15	0.15

It is very clear above that when you calculate your tax under New tax regime, even if the investment under section 80 C is Zero, one ends up paying less tax as compared to the same income and tax calculation under old tax regime with an investment under the section 80 C.

This shows that there is no need to invest your money under section 80 C options if your income crosses Rupees 15 Lakhs annually.