Will switching to a consulting role at ₹1 crore salary save you tax?

livemint.com:

₹1 crore, an employee pays about ₹30 lakh tax. This 30% tax outgo is under the new tax regime and includes a 10% surcharge and 4% cess. The employee can save some tax by opting for the old regime if he can make tax-saving investments and has expenses of at least ₹4.84 lakh.

Now, only ₹1.5 lakh worth of investments are allowed as tax deductions, while ₹3.35 lakh or more has to come from expenses like home loans, house rent allowance and medical insurance – not easy to achieve. There’s another option available – switching to a consulting role. In a consulting role, earnings are treated as business income and one can deduct expenses related to work to reduce the net taxable income, which may not be possible as an employee.

The maths is simple: you save tax if your business expenses exceed those you can claim as an employee. But for a high-earning individual consultant in the ₹1 crore income bracket, how much expenses will be enough to move the tax needle in his favour? To be sure, a consultant should truly be an independent professional and not attached to only one company that prohibits him from taking up other gigs. The tax department can treat such consultants as employees.