The Indian government has introduced a new tax regime for the Assessment Year 2023-2024 with the aim of simplifying the tax structure and reducing the tax burden on individuals. The new tax regime offers lower tax rates in exchange for giving up exemptions and deductions, which are commonly claimed by taxpayers.
New Tax Regime (2023-24)
| Income | Tax Rate |
|---|---|
|
0-3 Lakhs |
NIL |
|
3-6 Lakhs |
5% |
|
6-9 Lakhs |
10% |
|
9-12 Lakhs |
15% |
|
12-15 Lakhs |
20% |
|
15 Lakhs & Above |
30% |
Old Tax Regime (2023-24)
| Income | Tax Rate |
|---|---|
|
0-2.5 Lakhs |
NIL |
|
2.5 - 5 Lakhs |
5% |
|
5 - 10 Lakhs |
20% |
|
Above 10 Lakhs |
30% |
TAX Rebate
In 2023 budget, Finance Minister Nirmala Sitharaman Personal Income Tax rebate limit increased to Rs 7 lakh, from earlier Rs 5 lakh in the new tax regime. People earning up to Rs 7 lakh, do not pay any income tax and get full benefit of rebate under Section 87A.
Here We are presenting four different Taxation Cases for Annual Income of a Salaried person upto 10 Lakhs. If you choose Old Tax Regime for filing income tax, you can be in No-Tax zone till 10 lakh income. Those earning upto 7.5 Lakhs annually need not to worry about tax saving now. As they are given rebate till 7 Lakh along with 50,000 Standard Deduction.
Case I - Annual Salary 6 Lakhs
| Particulars | Old Tax Regime (2023-24) | NewTax Regime (2023-24) |
|---|---|---|
|
Annual Income |
6 Lakhs |
6 Lakhs |
|
Less Std. Deductions |
50,000 |
50,000 |
|
Less 80C |
50,000 |
|
|
Net Taxable Income |
5 Lakhs |
5.5 Lakhs |
|
Tax Payable |
12,500 |
12,500 |
|
Less- Rebate |
12,500 |
12,500 |
|
Final Tax Payable |
NIL |
NIL |
According to the new tax rules, if an individual’s yearly earnings are at or below Rs 6 lakh, they will not owe any taxes. On the other hand, if a salaried person’s yearly income is calculated under the New Tax Regime(2022-23), their tax obligation would be Rs 22,500 (not including additional cess), assuming they do not utilize any deductions apart from the standard deduction of Rs 50,000. Nevertheless, a considerable number of salaried taxpayers were already exempt from paying taxes under the Old Tax Regime tax system, given that they had a total deduction of Rs 1 lakh, comprising of the standard deduction of Rs 50,000 and deductions under Section 80C.
Case II - Annual Salary 7.5 Lakhs
| Particulars | Old Tax Regime (2023-24) | NewTax Regime (2023-24) |
|---|---|---|
|
Annual Income |
7.5 Lakhs |
7.5 Lakhs |
|
Less Std. Deductions |
50,000 |
50,000 |
|
Less 80C |
1,50,000 |
|
|
Less: 80CCD(1B)-NPS |
50,000 |
|
|
Net Taxable Income |
5 Lakhs |
7 Lakhs |
|
Tax Payable |
12,500 |
25,000 |
|
Less- Rebate |
12,500 |
25,000 |
|
Final Tax Payable |
NIL |
NIL |
So Even If you are earning Upto 7.5 Lakhs annually, You need not to pay any tax to the government. The best part is no matter you choose Old regime or the New Tax Regime 2023-24, you are in tax-free zone.
Case III - Annual Salary 9 Lakhs
| Particulars | Old Tax Regime (2023-24) | NewTax Regime (2023-24) |
|---|---|---|
|
Annual Income |
9 Lakhs |
9 Lakhs |
|
Less Std. Deductions |
50,000 |
50,000 |
|
Less 80C |
1,50,000 |
|
|
Less: 80CCD(1B)-NPS |
50,000 |
|
|
Less: 80D, Health Insurance(25k Self+25k Parents) |
50,000 |
|
|
Less: 24(B) home loan interest
|
1,00,000 |
|
|
Net Taxable Income |
5 Lakhs |
8.5 Lakhs |
|
Tax Payable |
12,500 |
40,000 |
|
Less- Rebate |
12,500 |
|
|
Final Tax Payable |
NIL |
40,000 |
As you move above 9 lakh salary, Rebate no longer works and you should pay taxes if going through New Tax regime. Final Tax payable is 40,000 for those earning 9 lakh annually with standard deduction of Rs. 50,000. But Still if you choose Old regime with 50,000 Standard deductions, 1,50,000 80C benefits , investing 50,000 in NPS and taking health insurance policies for self and parents (25,000 Self+25,000 Parents) and getting home loan interest benefits upto 1,00,000, you can end up paying NIL Tax!
Case III - Annual Salary 10 Lakhs
| Particulars | Old Tax Regime (2023-24) | NewTax Regime (2023-24) |
|---|---|---|
|
Annual Income |
10 Lakhs |
10 Lakhs |
|
Less Std. Deductions |
50,000 |
50,000 |
|
Less 80C |
1,50,000 |
|
|
Less: 80CCD(1B)-NPS |
50,000 |
|
|
Less: 80D, Health Insurance(25k Self+50k Parents) |
75,000 |
|
|
Less: 24(B) home loan interest
|
2,00,000 |
|
|
Net Taxable Income |
4.75 Lakhs |
9.5 Lakhs |
|
Tax Payable |
11,250 |
52,500 |
|
Less- Rebate |
11,250 |
|
|
Final Tax Payable |
NIL |
52,500 |
As your salary exceeds 10 lakhs, the Rebate is no longer applicable and you are required to pay taxes under the New Tax regime. The tax payable for an annual income of 10 lakhs, with a standard deduction of 50,000, is 52,500. However, if you opt for the old tax regime with a standard deduction of 50,000, 80C benefits of 1,50,000, investment of 50,000 in NPS, health insurance of 25,000 for yourself and 50,000 for your parents, and home loan interest benefits of 2,00,000, you may not have to pay any taxes.
