Income Tax News: Finance Minister Nirmala Sitharaman, on 1st February, announced the Budget 2025, which was widely hailed by the salaried class and the middle class. The highlight of the budget was that citizens with an annual income of up to ₹12 lakh will not have to pay any tax. However, if your annual income is ₹15 lakh, you might be wondering how much tax you will have to pay under the new and old tax regimes. While the government is set to introduce a new Income Tax Act to simplify the tax structure, it is crucial to understand the current tax implications. Depending on whether you opt for the old tax regime or the new one, your tax liability will vary. Here’s a detailed breakdown of how much tax you will have to pay under both regimes.
Tax Calculation for ₹15 Lakh Annual Income
New Tax Regime: Lower Tax Liability
Under the new tax regime, the tax calculation is straightforward, as it offers a lower tax rate but fewer deductions.
Gross Income: ₹15 lakh
Standard Deduction: ₹75,000
Taxable Income: ₹15,00,000 - ₹75,000 = ₹14,25,000
Tax Slabs and Rates:
₹0 - ₹4 lakh: No tax
₹4 lakh - ₹8 lakh: 5% of ₹4 lakh = ₹20,000
₹8 lakh - ₹12 lakh: 10% of ₹4 lakh = ₹40,000
₹12 lakh - ₹14.25 lakh: 15% of ₹2.25 lakh = ₹33,750
Total Tax: ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750
Cess (4%): ₹93,750 × 4% = ₹3,750
Final Tax Payable: ₹97,500
The new tax regime offers a simplified approach with reduced tax liability, making it an attractive option for many taxpayers.
Old Tax Regime: Higher Tax with More Deductions
In the old tax regime, individuals can claim various deductions under Section 80C, 80D, and 24B to reduce taxable income.
Gross Income: ₹15 lakh
Deductions:
Standard Deduction: ₹50,000
Section 80C (Investments like PPF, LIC): ₹1,50,000
Section 80D (Health Insurance Premiums): ₹1,00,000
Home Loan Interest (Section 24B): ₹2,00,000
Total Deductions: ₹5,00,000
Taxable Income after Deductions: ₹15,00,000 - ₹5,00,000 = ₹10,00,000
Tax Slabs and Rates:
₹0 - ₹2.5 lakh: No tax
₹2.5 lakh - ₹5 lakh: 5% of ₹2.5 lakh = ₹12,500
₹5 lakh - ₹10 lakh: 20% of ₹5 lakh = ₹1,00,000
Total Tax: ₹12,500 + ₹1,00,000 = ₹1,12,500
Cess (4%): ₹1,12,500 × 4% = ₹4,500
Final Tax Payable: ₹1,17,000
Which Regime Saves More Income Tax?
Comparing both tax regimes, an individual earning ₹15 lakh per annum will pay:
₹97,500 under the new tax regime
₹1,17,000 under the old tax regime
This results in a saving of ₹19,500 under the new tax regime. While the old tax regime offers deductions, the new tax regime provides a lower tax burden with a simplified structure. Taxpayers should choose based on their investment preferences and deduction eligibility.