Listen to this articleTABLE OF CONTENT
How Much Tax Are You Saving?
The Temptation of Instant Gratification
Investing Your Tax Savings: The Power of Compounding
A Penny Saved Is a Penny Earned
The recent budget changed tax slabs, reducing your tax burden. That means more money in your wallet. What’s the first thought that crosses your mind? A vacation? A new gadget? A lifestyle upgrade?
Hold that thought.
What if I told you that this extra money—if invested smartly—could grow into a small fortune over time?
Take a moment to consider this: What if you could use this tax savings to secure your financial future?
Let’s break it down and explore how you can turn your tax savings into long-term wealth.
How Much Tax Are You Saving?
The revised tax structure has reduced tax liability for various income levels. Depending on your earnings, here’s how much extra money you could have in your pocket this year:
| Income | Existing Rates (%) | Existing Tax Liability (₹) | Proposed Rates (%) | Tax Liability Under Proposed Rates (₹) | Savings In Proposed Rates (₹) |
|---|---|---|---|---|---|
| Up to ₹3 lakh | Nil | Nil | Nil | Nil | Nil |
| ₹4 lakh | 5 | 5,000 | Nil | Nil | 5,000 |
| ₹7 lakh | 5 | 20,000 | 5 | 15,000 | 5,000 |
| ₹8 lakh | 10 | 30,000 | 5 | 20,000 | 10,000 |
| ₹10 lakh | 10 | 50,000 | 10 | 40,000 | 10,000 |
| ₹11 lakh | 15 | 65,000 | 10 | 50,000 | 15,000 |
| ₹12 lakh | 15 | 80,000 | 10 | 60,000 | 20,000 |
| ₹13 lakh | 20 | 1 Lakh | 15 | 75,000 | 25,000 |
| ₹14 lakh | 20 | 1.2 Lakh | 15 | 90,000 | 30,000 |
| ₹15 lakh | 20 | 1.4 Lakh | 15 | 1.05 Lakh | 35,000 |
| ₹16 lakh | 30 | 1.7 Lakh | 15 | 1.2 Lakh | 50,000 |
| ₹17 lakh | 30 | 2 Lakh | 20 | 1.4 Lakh | 60,000 |
| ₹18 lakh | 30 | 2.3 Lakh | 20 | 1.6 Lakh | 70,000 |
| ₹19 lakh | 30 | 2.6 Lakh | 20 | 1.8 Lakh | 80,000 |
| ₹20 lakh | 30 | 2.9 Lakh | 20 | 2 Lakh | 90,000 |
| ₹21 lakh | 30 | 3.2 Lakh | 25 | 2.25 Lakh | 95,000 |
| ₹22 lakh | 30 | 3.5 Lakh | 25 | 2.5 Lakh | 1 Lakh |
| ₹23 lakh | 30 | 3.8 Lakh | 25 | 2.75 Lakh | 1.05 Lakh |
| ₹24 lakh | 30 | 4.1 Lakh | 25 | 3 Lakh | 1.1 Lakh |
Note:
On all incomes above ₹24 lakh, the benefit from the proposed changes remains ₹1.1 Lakh.
The actual tax to be paid will have an additional 4% cess added to your liability.
That’s money that would’ve gone to the government. But now, it’s yours.
The question is: What will you do with it?
The Temptation of Instant Gratification
We are naturally inclined to spend unexpected savings on things that provide instant pleasure. It’s tempting to spend that extra cash on things that bring immediate joy.
A fancy dinner. A new iPhone. A weekend getaway.
But let’s be honest—how long will the excitement last?
A week? A month? Then it’s back to routine, and the money is gone.
Instead, imagine if this extra cash could work for you, compounding into something substantial over time.
Compare that to the long-term power of delayed gratification—the magic of compounding.
That’s where investing comes into play.
Investing Your Tax Savings: The Power of Compounding
What if, instead of spending, you invested this tax-saving amount in a mutual fund SIP earning 12% annually?
Here’s what happens:
| Income (₹) | Savings (₹) | 5 Years (₹) | 10 Years (₹) | 15 Years (₹) | 20 Years (₹) | 25 Years (₹) | 30 Years (₹) |
|---|---|---|---|---|---|---|---|
| 4,00,000 | 5,000 | 35,576 | 98,273 | 2,08,766 | 4,03,494 | 7,46,670 | 13,51,463 |
| 7,00,000 | 5,000 | 35,576 | 98,273 | 2,08,766 | 4,03,494 | 7,46,670 | 13,51,463 |
| 8,00,000 | 10,000 | 71,152 | 1,96,546 | 4,17,533 | 8,06,987 | 14,93,339 | 27,02,926 |
| 10,00,000 | 10,000 | 71,152 | 1,96,546 | 4,17,533 | 8,06,987 | 14,93,339 | 27,02,926 |
| 11,00,000 | 15,000 | 1,06,728 | 2,94,819 | 6,26,299 | 12,10,481 | 22,40,009 | 40,54,389 |
| 12,00,000 | 20,000 | 1,42,304 | 3,93,092 | 8,35,066 | 16,13,975 | 29,86,679 | 54,05,852 |
| 13,00,000 | 25,000 | 1,77,880 | 4,91,365 | 10,43,832 | 20,17,468 | 37,33,348 | 67,57,315 |
| 14,00,000 | 30,000 | 2,13,456 | 5,89,637 | 12,52,598 | 24,20,962 | 44,80,018 | 81,08,778 |
| 15,00,000 | 35,000 | 2,49,032 | 6,87,910 | 14,61,364 | 28,24,456 | 52,26,688 | 94,60,241 |
| 16,00,000 | 50,000 | 3,55,759 | 9,82,729 | 20,87,664 | 40,34,937 | 74,66,697 | 1,35,14,630 |
| 17,00,000 | 60,000 | 4,26,911 | 11,79,274 | 25,05,197 | 48,41,924 | 89,60,036 | 1,62,17,556 |
| 18,00,000 | 70,000 | 4,98,063 | 13,75,819 | 29,22,730 | 56,48,911 | 1,04,53,375 | 1,89,20,482 |
| 19,00,000 | 80,000 | 5,69,215 | 15,72,364 | 33,40,263 | 64,55,898 | 1,19,46,714 | 2,16,23,408 |
| 20,00,000 | 90,000 | 6,40,367 | 17,68,910 | 37,57,796 | 72,62,885 | 1,34,40,053 | 2,43,26,334 |
| 21,00,000 | 95,000 | 6,75,943 | 18,67,182 | 39,66,563 | 76,66,379 | 1,41,86,723 | 2,56,77,797 |
| 22,00,000 | 1,00,000 | 7,11,518 | 19,65,458 | 41,75,328 | 80,69,874 | 1,49,33,394 | 2,70,29,261 |
| 23,00,000 | 1,05,000 | 7,47,094 | 20,63,729 | 43,84,095 | 84,73,368 | 1,56,80,064 | 2,83,80,724 |
| 24,00,000 | 1,10,000 | 7,82,670 | 21,62,002 | 45,92,861 | 88,76,862 | 1,64,26,734 | 2,97,32,187 |
If you save just ₹5,000 per year, it can grow to ₹13.5 lakh in 30 years.
If you save ₹1 lakh per year, you’re looking at ₹2.7 crore.
This isn’t magic. It’s math.
That’s the power of compounding. Your money doesn’t just add up; it multiplies over time.
The same money that could buy you a weekend trip today could help you retire rich tomorrow.
A Penny Saved Is a Penny Earned
Warren Buffett once said, “Do not save what is left after spending, but spend what is left after saving.”
By directing your tax savings into investments, you are not just keeping money—you are making it work for you.
Instead of spending it on short-lived pleasures, imagine what this money could do for your financial security, retirement, or even your children’s future.
The government has given you a tax cut. Now, it’s up to you to turn that cut into a wealth-building opportunity.
The earlier you start, the bigger your gains.
The tax cuts have handed you an opportunity.
Will you let it slip through your fingers, or will you make it count?
The choice is yours.
