Earnings Tax Calculations for New vs Previous Tax Regime: The proposed new tax regime is all set to come back into impact on April 1, 2025.
The brand new system will likely be relevant for the monetary 12 months 2025-26.
For the present monetary 12 months (2024-25), taxpayers can file their return as per the previous tax regime and the prevailing new tax regime.
The ITR submitting can probably begin in June.
Although the prevailing tax regime is the default regime for brand spanking new taxpayers, they’ll nonetheless change to any regime between the previous and the brand new.
However no matter tax regime you go for this monetary 12 months or the following monetary 12 months, are you aware your revenue tax legal responsibility for annual incomes of Rs 7.50 lakh, Rs 13 lakh, Rs 15 lakh, Rs 22.5 lakh, Rs 30 lakh, and Rs 37.5 lakh?
Let’s learn the article to know!
Current new tax regime
Within the current tax regime, tax begins from the Rs 3 lakh revenue slab.
After a tax rebate of Rs 25,000 underneath Part 87A, revenue as much as Rs 7 lakh is tax-free for resident people (not relevant for NRIs).
A typical deduction of Rs 75,000 is relevant for salaried people, rising their tax-free restrict by the identical quantity.
Taxpayers have to pay 15 per cent tax on revenue of Rs 10 lakh-12 lakh, 20 per cent on Rs 12 lakh-Rs 15 lakh revenue, whereas the tax slab of 30 per cent begins from Rs 15 lakh revenue.
Previous tax regime
Most taxpayers have shifted to the brand new tax regime, however many nonetheless observe the previous regime.
The regime affords tax-free revenue as much as Rs 5,00,000 after a tax rebate of Rs 12,500.
There’s a 20 per cent tax on revenue above Rs 5,00,000, whereas the 30 per cent tax slab begins from Rs 10,00,000 revenue.
The attraction of the previous tax regime is tax advantages comparable to these underneath Part 80C of the Earnings Tax Act, 1961.
Proposed new tax regime
Finance minister Nirmala Sitharaman introduced adjustments within the new tax regime in Price range 2025, making an revenue as much as Rs 12,00,000 tax-free for non-salaried people.
The utmost tax rebate restrict was elevated from Rs 25,000 to Rs 60,000.
Salaried-class people will get a typical deduction of Rs 75,000, so their revenue as much as Rs 12,75,000 will likely be tax-free.
The regime will present marginal reduction to taxpayers whose revenue crosses the tax-free restrict marginally. In such a case, their tax will not be greater than the incremental revenue.
Earnings tax calculations
We are going to calculate revenue tax liabilities for salaried-class taxpayers incomes Rs 7.50 lakh, Rs 13 lakh, Rs 15 lakh, Rs 22.5 lakh, Rs 30 lakh, and Rs 37.5 lakh a 12 months.
We is not going to take any deduction for our calculations and can apply a rebate, customary deduction, and marginal reduction for calculations.
Earnings tax on Rs 7.50 lakh revenue
Current new tax regime- 0
Previous tax regime- Rs 54,600
Proposed new tax regime- 0
Earnings tax on Rs 13 lakh revenue
Current new tax regime- Rs 88,400
Previous tax regime- Rs 1,95,000
Proposed new tax regime- Rs 26,000
Earnings tax on Rs 15 lakh revenue
Current new tax regime- Rs 1,30,000
Previous tax regime- Rs 2,57,400
Proposed new tax regime- Rs 97,500
Earnings tax on Rs 22.5 lakh revenue
Current new tax regime- Rs 3,56,200
Previous tax regime- Rs 4,91,400
Proposed new tax regime- Rs 2,53,500
Earnings tax on Rs 30 lakh revenue
Current new tax regime- Rs 5,90,200
Previous tax regime- Rs 7,25,400
Proposed new tax regime- Rs 4,75,800
Earnings tax on Rs 37.50 lakh revenue
Current new tax regime- Rs 8,24,200
Previous tax regime- Rs 9,59,400
Proposed new tax regime- Rs 7,09,800
