This story is from July 13, 2024
Income Tax Calculator 2024-25: It’s the start of the financial year and if you are confused between the new and the old income tax regime, then we have you covered. While the old tax regime allows for exemptions and deductions like Section 80C, House Rent Allowance, Leave Travel Allowance etc., the new tax regime offers lower tax rates and multiple slabs. Standard deduction is available under both regimes. We take a look at different income levels and common exemptions and deductions you may want to claim, to calculate and analyse the best income tax regime for you. This analysis has been done by Akhil Chandna, Partner, Grant Thornton Bharat. It is important to note that the analysis in the tables is broadly indicative. Each individual should choose their beneficial tax regime on a case-to-case basis. The analysis cannot be standardised.
Income Tax Slabs 2024-25 Old Regime: The tax slabs and income tax rates in the table are applicable for individuals (residents below 60 years of age, NR and NOR). Under the old tax regime, resident individual taxpayers are eligible for a tax rebate of Rs 12,500 or actual tax payable whichever is Lowe, if the total income does not exceed Rs 5 lakh. A health and education cess is levied at the rate of 4%, for all individuals on the income-tax and surcharge (if applicable).
Income Tax Slabs 2024-25 New Regime: In this table, you can see the income tax slabs and income tax slabs for the new income tax regime. Under this regime, the rebate eligibility limit is Rs 7 lakh. This means a tax rebate of up to Rs 25,000 will be available to taxpayers. A marginal relief is also available to resident individuals whose net taxable income exceeds Rs 7,00,000 and the incremental income tax liability is higher than incremental income above Rs 7,00,000.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 7 lakh has been taken. Assuming that the salaried individual chooses to claim only a standard deduction of Rs 50,000 which is available both under the new and the old income tax regime, it would clearly be beneficial to opt for the new income tax regime. While under the old tax regime the tax outgo would be Rs 44,200, it would be nil under the new tax regime.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 15 lakh has been taken. Again, assuming that only a standard deduction of Rs 50,000 availed, the salaried individual will find it beneficial to choose the new tax regime. This is because under the new income tax regime, a lower tax rate would be applicable at that income level.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 30 lakh has been taken. Even at income levels as high as Rs 30 lakh, it is more beneficial to opt for the new income tax regime versus the old tax regime, if the only deduction or exemption that the salaried individual is claiming is the standard deduction.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 7 lakh has been taken. What has changed in this scenario is that we are assuming that the individual claims the Section 80C deduction limit of Rs 1.5 lakh. It’s interesting to note that if standard deduction and Section 80C is availed, then the tax outgo under both the old and new tax regime is nil. Hence, if as a salaried individual you invest in mutual funds, PPF etc. opting for the old regime is equally beneficial for you.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 15 lakh has been taken. Again, we are assuming a scenario where standard deduction and Section 80C benefits are availed. What changes here is that with a higher taxable income, the salaried individual is not eligible for a rebate under Section 87A, also a higher tax rate kicks in compared to the new tax regime. Hence, in such a scenario, the new income tax regime makes more sense.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 30 lakh has been taken. If a salaried taxpayer opts for the old tax regime while availing only the standard deduction and Section 80C limit, the individual will have to dish out more tax. The new tax regime would be more beneficial even at a salary level of Rs 30 lakh.
Income Tax Calculator New Versus Old Regime: In this table, a gross salary level of Rs 7 lakh has been taken. However, we are now looking a scenario where an individual gets salary exemptions like HRA, LTA etc. In this case too, because the income level is at Rs 7 lakh, the tax outgo under both regimes would be zero, irrespective of whether you have HRA and LTA as a part of your salary. Given the proof that you need to furnish for these exemptions. The new tax regime may be less cumbersome.