INCOME TAX PROVISIONS FOR FINANCIAL YEAR 2024-25 (AY 2025-26)
(NOTE - This post is further to our post for past FY in this site )
1. In the Budget of FY 2024-25 (current) even though there have not been many changes yet the New Regime has been further made more attractive and beneficial fo a larger population of Middle Class Tax payers. For a Taxable Income of 12 Lakhs the total savings for salaried person incl pensioner savings to the extent of Rs 17000 have been incorporated
2. Under the New REGIME the tax slabs as given later in this post, have been revised so as to make the NEW REGIME further more popular and lesser taxing than the OLD REGIME which stands unchanged for the last many years. The REVISED NEW REGIME is made more beneficial for the lower slabs which also accrues for higher slabs as well.
3. In addition to the slabs, the Standard Deduction for the salaries and pensioners has been increased to 75000 from existing 50000 For the New Regime only. The deductions for Family Pensioners under Sec 57(III) has also been increased from 15000 to 25000 or 30% of Family pension which ever is lower for the New Regime only. No other deductions are permitted for the existing pensioners. The other deductions permitted under the Regime are given in our earlier post of previous year (FY 2023-24) which must be read in conjunction with this post.
4. As regards the choice of OLD Vs NEW one need to specifically calculate the payable taxes under both regimes to pick. No thumb Rule can be made for this as the balance tilts with the over all Taxable Income of the individuals.
5. CALCULATION OF INCOME TAX - FLOW CHART
NEW SLABS CALCULATION - FLOW CHART
6. OLD REGIME - CALCULATIONS -
One may go to the link and open the web page for details of calculations under the old regime however a quick brief is also given here.
https://biggerfmly.blogspot.com/2024/05/nixon.html
OLD REGIME SLABS- Similarly calculate and note down your payable basic income tax under the old regime based on the taxable income as calculated above using the tax slabs (There is no change to the slabs of previous years under old regime) as given below :-
NOTE -- For senior citizen the first slab of zero I-Tax is from 0 to 3 Lakh hence the tax on Rs 10 lakh works out to be Rs 110000/- . And the tax for any amount above 10 Lakh will be 110000 plus 30% of the amount above 10 lakh. All deductions as hither to fore are allowed however there is no change to Standard deduction which remains at 50000 for old regime and the rebate under 87A also remains to be no tax up to Taxable income up to Rs five Lakh, where as in New regime they have been enhanced for the FY 2024-25.
CESS 4% on Tax - To be in addition to the basic tax calculated above.
AN EXAMPLE - FOR COMPARISON
Let us suppose that a senior citizen (60 to 80 Yrs of age), for the Fin Yr 2024-25 will have GROSS TOTAL INCOME from Pension, Housing Property, Bank Deposits (More than 50000), Interest on Savings Accounts , Post Office Deposits, Shares or Mutual funds all added up to make it as Rs 15.75 Lakh.
He / she had contributed to PPF Rs150000/- under Sec 80-C during the FY 2024-25, Taken Medical Insurance under Sec 80D for 25000/- , Rs 50000/- under Sec 80 TTB and in addition counting the Standard Deduction of 50000/- (for old Regime), the Total Deductions will amount to Rs 275000/- under OLD REGIME.
HENCE- FOR OLD REGIME(a) The Taxable Income (TI) will be = 1575000 minus 275000 i.e 13 lakh.(b) The Tax will be 110000 + 90000 (30% of 3 Lakh) = Rs 200000/-HOWEVER FOR NEW REGIME- with Standard Deduction of 75000 :-(a) the TI works out to just = 15 Lakh(b) the tax as seen above = 140000/-(Rs 60000 less than under old regime with deductions)New Regime is thus more beneficial. This difference will remain even if the Gross Income is more than 15.75 lakh..In all other cases one will need to calculate Taxes under both regimes to select the most beneficial Regime. There cannot be a thumb rule due to number of variables in Tax slabs, TI and Rates of Tax etc.
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