Why Salaried Professionals Pay More
Under the new tax regime, salaried individuals have limited access to deductions and exemptions, with only a standard deduction of ₹75,000 available. For instance, someone earning ₹24 lakh annually as a salaried employee may pay ₹2.92 lakh in taxes. The same income structured as a consultancy with ₹12 lakh in legitimate business expenses could result in zero tax liability.
Consultants can deduct expenses such as office rent, internet bills, staff salaries, and equipment costs from their taxable income. Goel points out that at higher income levels—like ₹60 lakh per year—a salaried professional could face ₹18 lakh in taxes, whereas a consultant with strategic deductions can drastically reduce this amount. “Consultants can legally structure income, reduce tax liability, and keep more in hand,” she notes.
Trade-offs and Considerations
While the tax savings are significant, consultancy comes with challenges. Unlike salaried roles, independent consultants do not receive benefits like EPF, paid leave, or job security. Income is variable, and there is an increased compliance burden. Goel emphasizes that these figures are hypothetical and depend on the nature of the consultancy work.
Growing Trend Among High Earners
The shift towards consultancy highlights the widening tax disparity between high-income earners and the middle class. Many professionals now weigh the security of a fixed paycheck against potential tax savings, with lakhs—or even crores—on the line. The trend is catching attention across India, particularly among top earners seeking efficient tax planning.