Income tax in India is calculated on a slab-based system, where different portions of your income are taxed at different rates. According to the slabs you provided:
- Income up to Rs. 4,00,000: Nil tax
- Income from Rs. 4,00,001 to Rs. 8,00,000: 5% tax
- Income from Rs. 8,00,001 to Rs. 12,00,000: 10% tax
- Income from Rs. 12,00,001 to Rs. 16,00,000: 15% tax
- Income from Rs. 16,00,001 to Rs. 20,00,000: 20% tax
- Income from Rs. 20,00,001 to Rs. 24,00,000: 25% tax
- Income above Rs. 24,00,000: 30% tax
The advantage of the old regime is that it allows individuals to claim deductions under sections such as 80C, 80D, 80CCD(1B), and 80TTA. By strategically planning and using available deductions, it is possible to reduce taxable income, which may help in lowering your tax liability. With careful tax planning, individuals with a gross income of Rs. 7,75,000 could potentially achieve zero tax, depending on eligibility under sections like 80C, 80D, 80CCD(1B), and 80TTA, while also maximising savings.
- Under the new tax regime for FY 2025-26, salaried individuals can claim a standard deduction of Rs. 75,000. This means that a gross income of Rs. 7,75,000 reduces to taxable income of about Rs. 7,00,000.
- The old regime still allows deductions like Section 80C (up to Rs. 1,50,000), 80CCD(1B) (Rs. 50,000), 80D (up to Rs. 25,000), and 80TTA (up to Rs. 10,000). With those, taxable income could fall significantly, for example, around Rs. 4,65,000 depending on income & deductions claimed. \
- Under Section 87A, for FY 2025-26, individuals with total taxable income up to Rs. 12,00,000 under the new tax regime can claim a rebate of up to Rs. 60,000, which may reduce their tax payable to zero if tax before rebate is ≤ that amount. Under the old regime, rebate remains at Rs. 12,500 for taxable income up to Rs. 5,00,000.
Here is a table illustrating how this works:
Tax Calculation Particulars |
Old Regime (Rs.) |
New Regime (Rs.) |
Gross Salary u/s 17(1) |
7,50,000 |
7,50,000 |
Less: Exemption u/s 10 |
|
|
HRA Exemption |
50,000 |
NA |
Less: Deduction u/s 16 |
|
|
Standard deduction |
50,000 |
75,000 |
Income under the Head Salary |
6,50,000 |
6,75,000 |
Less: Deduction under Chapter VI-A |
|
|
Section 80C |
50,000 |
NA |
Net Total Income |
6,00,000 |
6,75,000 |
Income Tax (Excluding cess) |
33,800 |
13,370 |
Less: Rebate u/s 87A |
- |
13,370 |
Tax Liability (Including cess) |
33,800 |
0 |
Notes:
- Old regime allows deductions under 80C, 80CCD(1B), 80D, and 80TTA.
- New regime only allows standard deduction (Rs. 75,000) and Section 87A rebate.
- Actual tax liability depends on individual eligibility; this table is illustrative.
So, this is how you can claim the full benefit of section 80C, 80D, 80TTA, and 80CCD(1B), and not have to pay any tax.
