Income tax is a progressive tax applied based on income levels. India offers two tax regimes:
- Old Regime – Includes exemptions and deductions.
- New Regime – Offers lower rates but fewer exemptions.
Key Highlights for FY 2024-25
- Enhanced Standard Deduction: ₹75,000 for salaried individuals under the new regime.
- Revised Slabs: New regime slabs broadened to include more income brackets.
- Family Pension Deduction: Increased to ₹25,000 (from ₹15,000).
- Employer’s NPS Contribution: Limit raised to 14% from 10%.
New Regime Tax Slabs (FY 2024-25)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3,00,000 | NIL |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
- Rebate (Section 87A): Individuals with income up to ₹7 lakh pay no tax.
Old Regime Tax Slabs (FY 2024-25)
| Income Slab | Tax Rate (Below 60 Years) |
|---|---|
| Up to ₹2,50,000 | NIL |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Additional exemptions apply for senior citizens (above 60 years) and super senior citizens (above 80 years).
Choosing Between Old and New Regime
- New Regime: Ideal for those with fewer deductions and lower investments.
- Old Regime: Beneficial for individuals who utilize exemptions such as HRA, 80C investments, or home loan interest.
Example Calculation (Old Regime)
Income: ₹8,00,000
- Exemption: Up to ₹2,50,000 – NIL
- Next ₹2,50,000: 5% = ₹12,500
- Remaining ₹3,00,000: 20% = ₹60,000
Total Tax = ₹72,500 + 4% cess = ₹75,400
Surcharge & Cess
- Surcharge: Applied on high incomes (₹50 lakh+). Rates range from 10% to 25%.
- Cess: Additional 4% for health and education.
Conclusion
Evaluate both regimes based on your income and deductions to decide the most beneficial option. While the new regime simplifies tax filing, the old regime offers more savings through deductions.
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