By Amarpal S Chadha
Achieving financial success is not only about earning but also about retaining and growing your wealth. With the amendments proposed in Budget 2025 impacting tax obligations, understanding the updates is crucial to structuring your finances effectively. Here’s how individuals at different salary levels can optimise their financial planning.
Rs 12.75 lakh: Start strong on a tax-free basis
Owing to a rebate introduced by the latest budget for incomes up to Rs 12 lakh, paired with the standard deduction of `75,000 for salaried individuals, those earning Rs 12.75 lakh will have no tax liability under the new tax regime. This creates an excellent opportunity for young professionals to embark/continue their wealth-building journey without the concern of taxes.
With no immediate tax obligations, they can up their investments via systematic investment plans. For those who are open to taking on higher risks, options such as exchange-traded funds and cryptocurrencies could yield significant returns.
Rs 26 lakh: Balancing taxes with investments
Individuals in this bracket are seeking a balance between generating income through investments and saving taxes simultaneously. They are also increasingly focused on planning for retirement— National Pension Scheme, equity-linked saving schemes and Public Provident Fund are key here. Modern investment vehicles along with a mix of fixed-income products, such as government bonds and tax-saving fixed deposits, provide stability and tax efficiency. Investing in real estate, particularly for self-occupation, is an attractive option.
Rs 50-75 lakh: Surcharge implications
As salary levels touch `50 lakh, optimising your tax outflow becomes more critical due to the surcharge provisions. The focus shifts slightly from tax savings to investing in opportunities that generate additional income streams. Here, the new tax regime is even more attractive. However, NPS still remains a popular choice due to the tax benefits available under both the regimes. Further, to generate alternative income streams, they begin exploring other avenues in the capital markets. With long-term appreciation potential and the income tax provision allowing claims on two self-occupied properties, owning more than one property may become an appealing option.
Rs 1.5-2.5 cr: Maximising returns
Surcharge provisions are even more pronounced here, reaching up to 37% in the old regime. This significantly escalates tax liability, making it essential to structure your finances with care.The focus shifts towards creating multiple income streams and wealth generation.
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