Deciding Between New and Old Tax Regimes: How Even Income of Rs 10 Lakh Can Be Tax-Free
Salaried taxpayers face a critical decision in the upcoming ten days regarding their income tax regime for the fiscal year 2024-25. Employers are urging employees to make this selection at the outset of the new financial year. This decision, a one-time choice as per the Central Board of Direct Taxes, mandates taxpayers to select an income tax regime that will govern their taxation for the year, with the option to switch during the subsequent year’s tax return filing.
It’s noteworthy that the default option now leans towards the new tax regime, automatically placing those who miss the deadline under it.
Comparing the New and Old Tax Regimes: The new tax regime offers broader tax slabs and lower rates but omits various deductions such as HRA, LTA, and deductions for investments, insurance, and loan interests. Notably, proof of investments or expenses is not required.
Income Tax Slabs for 2024-2025:
New Income Tax Regime:
Up to 300,000 INR: Nil
300,001 to 600,000 INR: 5%
600,001 to 900,000 INR: 10%
900,001 to 1200,000 INR: 15%
1,200,001 to 1,500,000 INR: 20%
Above 1,500,000 INR: 30%
Old/Regular Tax Regime:
Up to 250,000 INR*: Nil
250,001 to 500,000 INR: 5%
500,001 to 1,000,000 INR: 20%
Above 1,000,000 INR: 30%