How to Save Tax for Salary Above 12 Lakhs - Ultimate Guide

Before talking about tax deductions, it is really important to understand how income tax is figured out for people earning ₹12 lakhs or more.

Salaried professionals often get confused by the argument between the old and new tax regimes FY (2025–26). Your investments and deductions will determine which one is best for you.

You must carefully utilize the deductions allowed by the Income Tax Act when figuring out how to save tax for salary above ₹12 lakh. The most worthwhile sections to examine are as follows.

Healthcare costs can be all over the place, but the government gives you a break on taxes with Section 80D. Here is the deal on deductions.

• You can deduct up to ₹25,000 for health plans covering yourself, your partner, and your kids.
• You can also deduct another ₹50,000 if you and your parents are above 60.

For example, you can claim a total deduction of ₹55,000 if you are paying ₹20,000 for your family and ₹35,000 for your elderly parents.

Several other sections, in addition to 80C and 80D, assist high-income earners in maximizing their taxes.

• National Pension System (NPS) - Section 80CCD(1B):
  • Extra deduction of up to ₹50,000.
  • Long-term retirement corpus with dual benefit of savings and tax reduction.
  • You can open or contribute through the NPS portal or through your employer.
• Home Loan – Section 24(b):
  • Interest on a home loan is deductible up to ₹2 lakh annually.
  • Boosts tax efficiency if you own a self-occupied property.
• Education Loan – Section 80E:
  • Interest deduction on student loans for post-secondary education (no upper limit, up to 8 years).

A salaried person making ₹12 lakh can legally lower their taxable income by more than ₹4 lakh. They will only have to combine these deductions.

Finding the best tax-saving investments for high income requires striking a balance between tax benefits, returns, and safety. These are 2025's best instruments.

In addition to deductions, the following are some useful tax-saving tips for salary above 12 lakhs.

• Based on your lifestyle and deductions, select the appropriate tax regime.
• If you live in rented housing, make a claim for HRA (House Rent Allowance).
• Make use of your employer's benefits for phone, travel, and meal reimbursement.
• Invest early in the financial year to spread your tax savings evenly.
• Opt for voluntary NPS contributions for long-term savings.
• Purchase health insurance and term plans, which protect your family and lower your taxable income.
• Make use of tax-efficient investment options like ELSS or ULIPs.

For example, depending on your regime, you can save about ₹60,000 in taxes each year by investing ₹1.5 lakh in ELSS, ₹50,000 in NPS, and ₹30,000 in health insurance.

A tax calculator for high income is a simple online tool that helps you estimate your tax liability and potential savings. Enter your yearly income (₹12 lakh or more) and choose between the old and new tax regimes to begin using it efficiently

Next, enter information about your investments and deductions, including home loan interest, NPS, and health insurance premiums. Also, mention contributions under Section 80C (PF, PPF, and ELSS). The calculator will instantly display your taxable income, total tax due, and potential savings.

Using an online calculator saves time and helps you compare which regime, old or new, offers greater benefits based on your deductions. With the Axis Max Life Tax Calculator, you can plan your taxes better, pick good investments, and be sure you are not paying too much if your income is over ₹12 lakhs.