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46-Year-Old with 18 Lakh Salary: How Much and How to Save for Taxes?

T S Khurana |398 Answers |Ask -Follow

Tax Expert - Answered on Feb 10, 2025

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by Deepak on Feb 10, 2025Hindi

Dear Sir. I am 46yrs old. I recently got a Job. My salary is 18lakhs. Monthly income is Rs1.20lakhs. I have two home loans for which I am paying Rs45000 EMI. I was not in job for 4years. So my wife took personal loan from banks and some money from friends to pay the EMI's. I am trying to sell one of the house to pay my debts which is a small one got it for 21.5lakhs. I am repaying the EMI'S and loans. I do not have proper savings. Please advise me what savings should I do for Tax. And which regime is best for me. Old Regime or New Regime. Please let me know. Thank you Sir.

Ans: Your question lacks details for proper reply.
Please confirm you have following Income :
Salary Rs.18.00 Lakhs yearly.
Monthly Income (Other) Rs.14.40 Lakhs yearly.
EMI Paid for Home Loans needs to be segregated into Principal Repayment & Interest Payment.
No personal Loans taken from Banks or Friends, by you or your spouse, are entitled for any exemption.
We can not suggest any Saving Pattern, in absence of complete information.
Question of Old Regime & New Regime, will come up only, after considering all details/facts.
Most welcome for any further clarifications. Thanks.

Asked on - Feb 10, 2025 | Answered on Feb 12, 2025

Dear Sir. My salary per month is Rs1,20,000. The only investment I have made is two houses for which I am paying Rs45000 EMI every Month. Since I am paying debts the following is the breakup, Monthly Salary: Rs1,20,000 Housing Loan EMI: Rs 45,000 Paying my friends who lend money + personal Loan: Rs 35,000 (which will not be considered for TAX) For Another six months I have to pay to finish the loans and Pay friends. Jewel Loan - 7lakh remaining Monthly EMI: Rs10,000 (which will not be considered for TAX) Monthly household expenses + Kids Van fees + Kids Music class Fees: Rs.25000 SIP Monthly-Not Tax saving SIP's : Rs.5,000 (From OCT 2024 -Feb 2025 Saved Rs.25,000 so far.) Total: 45000 + 35000 + 10000 + 25000 + 5000 = Rs. 1,20,000 Since this is my state of my expenses. Please tell me should I opt for Old Tax Regime or New Tax Regime. Thank you Sir.

Ans: Your Income for the year is :
Salary Rs.14.40 (@Rs.1,20,000.00 pm).
Housing Loan EMI Rs.45,000.00 needs to segregated into Repayment & Interest Paid, to work out exact details.
All your other expenses or Repayments or Savings shall not give you any tax benefits.
On the face of it, new tax regime seems suitable in your case.
Most welcome for any further clarifications. Thanks.

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