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For AY2025-26, understanding tax liability under each income tax regime is crucial. Here’s calculation for Rs 10 lakh, Rs 20 lakh, Rs 30 lakh, Rs 40 lakh, and Rs 50 lakh incomes.
The ITR filing season 2025 is going to take off soon with the government likely to notify income tax return forms in a few days.
Income Tax New Regime Vs Old Regime: As the assessment year 2025-26 has starts, the ITR filing season 2025 is going to take off soon, with the government likely to notify income tax return forms in a few days. Taxpayers are once again faced with the important choice between the old and new income tax regimes. For the financial year 2024-25 (AY2025-26), understanding the tax liability under each income tax regime is crucial. Here’re annual tax calculations for Rs 10 lakh, Rs 20 lakh, Rs 30 lakh, Rs 40 lakh, and Rs 50 lakh.
Here’s the difference between new and old tax regime, and check the tax slabs, exemptions, and how your choice can impact your take-home income.
| Feature | Old Regime | New Regime (Default from FY 2023-24) |
|---|---|---|
| Deductions (80C, HRA etc.) | Allowed | Not Allowed (with few exceptions) |
| Tax Slabs | Fewer, higher rates | More slabs, lower rates |
| Rebate under 87A | Income up to Rs 5 lakh – Nil tax | Income up to Rs 7 lakh – Nil tax |
| Standard Deduction | Rs 50,000 (available to salaried) | Available in Budget 2023 |
| Default Regime | Old (previously) | New regime is now default from FY2023-24 |
Old Tax Regime: Flexibility with Deductions
The old regime continues to offer a wide range of exemptions and deductions, making it suitable for those who invest in tax-saving instruments, pay home loan EMIs, or have significant insurance and medical expenses.
Old Tax Slabs for FY2024-25 (Same as previous year):
| Income Slab (Rs) | Tax Rate |
|---|---|
| 0 – 2.5 lakh | Nil |
| 2.5 – 5 lakh | 5% |
| 5 – 10 lakh | 20% |
| Above 10 lakh | 30% |
Rebate under Section 87A: Available for total income up to Rs 5 lakh, reducing tax liability to zero.
New Tax Regime: Lower Rates, Fewer Deductions
The new tax regime offers reduced slab rates but does not allow most exemptions or deductions such as HRA, LTA, 80C, 80D, or home loan interest (Section 24).
It is now the default regime under the Income Tax Act (unless you opt for the old one).
New Regime Tax Slabs for FY2024-25:
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 3 lakh | Nil |
| 3 – 6 lakh | 5% |
| 6 – 9 lakh | 10% |
| 9 – 12 lakh | 15% |
| 12 – 15 lakh | 20% |
| Above 15 lakh | 30% |
Rebate under Section 87A: Available for income up to Rs 7 lakh, making effective tax liability zero.
Tax Liability Comparison: Old vs New Regime
Let’s assume the taxpayer has an annual gross total income of up to Rs 50 lakh.
| Income (Rs ) | Old Regime(after deductions) | Tax Payable (Rs ) | New Regime(after standard deduction Rs 50,000) | Tax Payable (Rs) |
|---|---|---|---|---|
| 10,00,000 | 7,75,000 | 67,500 | 9,50,000 | 45,000 |
| 20,00,000 | 17,75,000 | 3,52,500 | 19,50,000 | 2,85,000 |
| 30,00,000 | 27,75,000 | 6,52,500 | 29,50,000 | 5,85,000 |
| 40,00,000 | 37,75,000 | 9,52,500 | 39,50,000 | 8,85,000 |
| 50,00,000 | 47,75,000 | 12,52,500 | 49,50,000 | 11,85,000 |
We’ll consider two scenarios:
| Income Level | Winner |
|---|---|
| Rs 10 lakh | New Regime |
| Rs 20 lakh | New Regime |
| Rs 30 lakh | New Regime |
| Rs 40 lakh | New Regime |
| Rs 50 lakh | New Regime |
Note: These are just rough estimates. Taxpayers are requited to consult their tax planner for an accurate calculation.
What Expert Says
CA Manish Mishra, Founder of GenZCFO said that the decision between older and newer tax regime lies entirely upon one’s spending habits, whether one invests or doesn’t not rely on tax-saving investments.
The old regime enjoys some tax-saving exemptions, such as Section 80C (1.5 lakh), 80D (health insurance), home loan interest (2 lakh), contributions to NPS, and HRA, which will benefit those who regularly invest in EPF, PPF, insurance, and other tax-saving instruments, he explained.
Mishra said the opposite is that the new tax regime has lower tax rates and the withdrawal of almost all the deductions.
“It is a simpler structure without taxpayers’ worries about keeping track of various
deductions throughout the year. This regime is attractive for individuals who emphasize liquidity and want a simple tax calculation without engaging in intricate planning,” he added.
