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Income Tax News: WOW! Pay Zero Tax on Salary of Rs 10 Lakh Under Old Regime, Check HOW

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Harsh
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Income Tax News

Income Tax News: The new financial year is here, and with it comes a crucial decision for salaried taxpayers in India: choosing your income tax regime for 2024-25. But unlike previous years, this time the clock is ticking. Companies are asking employees to declare their tax regime within the first month, and this choice will impact your tax bill for the entire year.

Income Tax Slabs 2024-2025

New Income Tax Regime:

Income Range (in INR) Rates
Up to 300,000 Nil
300,001 to 600,000 5%
600,001 to 900,000 10%
900,001 to 1,200,000 15%
1,200,001 to 1,500,000 20%
Above 1,500,000 30%

Old/Regular Tax Regime:

Income Range (in INR) Rates
Up to 250,000* Nil
250,001 to 500,000 5%
500,001 to 1,000,000 20%
Above 1,000,000 30%

New Tax Regime vs. Old Tax Regime: What's the Difference?

Here's a breakdown of the two options:

New Tax Regime

  • Simpler System: No need to collect and submit investment proofs.
  • Wider Slabs, Lower Rates: Generally lower tax rates compared to the old regime.
  • Limited Deductions: No benefits from popular deductions like HRA, LTA, or tax-saving investments.

Old Tax Regime

  • More Complex: Requires collecting and submitting proofs for various deductions.
  • Higher Rates, Lower Slabs: Generally higher tax rates, but with narrower slabs.
  • Ample Deductions: Allows claiming deductions for HRA, LTA, investments under Section 80C, and more, potentially reducing your taxable income significantly.

Choosing the Right Regime

  • Young Earners & Senior Citizens: If you don't have many tax-saving investments, the new regime's simplicity might be a good fit.
  • Renters with Proof Issues: Struggling to get rent receipts or your landlord's PAN? The new regime eliminates the need for HRA documentation.
  • Tax-Savvy Investors: If you utilize deductions like Section 80C or claim HRA benefits, the old regime could offer significant tax savings.

However, the old income tax regime offers tax relief under Section 87A, if the taxable income remains below Rs 5 lakh after deductions. Utilizing all exemptions and deductions can reduce the tax to zero for taxpayers with incomes up to Rs 10 lakh.

Here's an example to understand the benefits of the old income tax regime better:

Taxable Income (In Rs) 10,00,000
Standard Deduction -50,000
Section 80C Investments -1,50,000
Home Loan Interest Deduction/HRA -2,00,000
NPS Contribution -50,000
Health Insurance (Self & Parents) -55,000
Net Taxable Income 4,95,000
Tax Payable Nil*

Under the new regime, no tax is applicable if the taxable income is less than Rs 7 lakh, with a standard deduction of Rs 50,000 for salaried taxpayers. This translates to zero tax liability for individuals with taxable incomes up to Rs 7.5 lakh, without the obligation to invest in tax-saving schemes.

Old Tax regime income tax news