Income Tax Calculation Examples for FY 2024-25 will help you to calculate your income tax based on your income and investments. The income tax slab rates are mentioned in this article to understand the income tax calculation examples. With old tax regime, you pay more tax with respect to slab rates but you also get the options to claim deductions under various sections. With new tax regime, you get benefits of standard deduction, marginal relief and also tax rebate up to taxable income of Rs. 7 lakh.
Let s understand the income tax calculation examples in detail.
Income Tax Calculation Examples FY 2024-25 Video
Below is the video on Income Tax Calculation Examples for FY 2024-25 that will be applicable for AY 2025-26:
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Income Tax Slab Rates 2024-25
If your age is below 60 years, below are the Income Tax Slab Rates 2024-25 for you based on Old Tax Regime:
| Income | Tax Slab Rates (Old Tax Regime) |
|---|---|
| Rs. 0 – Rs. 2.5 Lakh | 0% |
| Rs. 2.5 Lakh – Rs. 5 Lakh | 5% |
| Rs. 5 Lakh – Rs. 10 Lakh | 20% |
| Rs. 10 Lakh or above | 30% |
Let us now see the reduced tax slab rates, that is New Tax Regime for age up to 60 years:
| Income | Tax Slab Rates (New Tax Regime) |
|---|---|
| Rs. 0 – Rs. 3 Lakh | 0% |
| Rs. 3 Lakh – Rs. 6 Lakh | 5% |
| Rs. 6 Lakh – Rs. 9 Lakh | 10% |
| Rs. 9 Lakh – Rs. 12 Lakh | 15% |
| Rs. 12 Lakh – Rs. 15 Lakh | 20% |
| Rs. 15 Lakh or above | 30% |
Above are the income tax slab rates for people of age up to 60 years. read more about income tax slab rates 2024-25 for tax brackets of all age groups.
How to Calculate Income Tax?
Based on the above income tax slab rates, you can easily calculate income tax with different tax slab rates.
Let’s understand this income tax calculation with the help of example:
Income Tax Calculation Example – Rs. 8 Lakh
With Rs. 8 Lakh of income after deductions of Employee Provident fund, standard deduction and other applicable deductions, below is the tax calculation with old and new tax regime:
Old Tax Regime
| Income Slabs | Tax Bracket | Income Tax |
|---|---|---|
| Rs. 0 – Rs. 2.5 Lakh | 0% | Rs. 0 |
| Rs. 2.5 Lakh – Rs. 5 Lakh | 5% | Rs. 12,500 |
| Rs. 5 Lakh – Rs. 8 Lakh | 20% | Rs. 60,000 |
| Cess | 4% | Rs. 2,900 |
| Total Income Tax | Rs, 75,400 |
New Tax Regime
Let us now see the tax calculation with new tax regime:
| Income Slabs | Tax Bracket | Income Tax |
|---|---|---|
| Rs. 0 – Rs. 3 Lakh | 0% | Rs. 0 |
| Rs. 3 Lakh – Rs. 6 Lakh | 5% | Rs. 15,000 |
| Rs. 6 Lakh – Rs. 8 Lakh | 10% | Rs. 20,000 |
| Cess | 4% | Rs. 1,400 |
| Total Income Tax | Rs. 36,400 |
So as seen above, you pay less income tax of Rs. 36,400 with new tax regime compared to old tax regime. You can save income tax with old tax regime by using different deduction options like Section 80C, Section 80CCD(1B), Section 80D, etc. This would help you to reduce your tax liability with old tax regime.
What is Taxable Income?
Your annual income that you receive as part of CTC (Cost to company) if you are salaried employee, or the revenue you generate as a businessman is not fully taxable. The entire income is termed as Gross Income for Financial year (April to March).
To calculate taxable income, you need to subtract various deductions from Gross Income, and below is the taxable income formula:
Taxable Income = Gross Income - DeductionsThese deductions include, standard deduction for salaried and pensioners, Employee provident fund (EPF), Public Provident Fund, medical insurance premiums, National Pen system (NPS) investments and many more tax saving options.
After deducting these investment options, you get taxable income on which your income tax is calculated.
Please note that most of the investment options allow you to claim deductions with old tax regime. New tax regime contains minimum investment options including standard deduction of Rs. 50,000.
ALSO READ: Deductions and Exemptions in New Tax Regime
Tax Rebate under Section 87A limits
Tax Rebate under section 87A is the way to get relief from income tax and pay zero income tax.
Below are the tax rebate 87A limits in old tax regime and new tax regime:
| Tax Regime | Income Limit | Tax Rebate (Maximum) |
|---|---|---|
| Old Tax Regime | Rs. 5 Lakh | Rs. 12,500 |
| New Tax Regime | Rs. 7 Lakh | Rs. 25,000 |
So based on above limits, if your taxable income is Rs. 5 lakh with old tax regime, your income tax based on slab rates will be Rs. 12,500, which will be cancelled by tax rebate 87A limit of Rs. 12,500, hence you don’t have to pay any income tax.
Similarly, with new tax regime, if your taxable income is Rs. 7 lakh, your income tax is Rs. 25,000 using slab rates, but you are also eligible for tax rebate of maximum Rs. 25,000, hence you don’t have to pay any income tax.
Watch below video of Tax Rebate examples:
Tax Rebate under Section 87A examples Video
What is Marginal Relief in New Tax Regime?
Marginal relief is a way to provide tax relief to small tax payers when their taxable income is just above Rs. 7 lakh.
So let’s say your taxable income is Rs. 7,10,000, below is the tax calculation:
Without Marginal Relief:
| Income Slab | Tax Bracket | Income Tax |
|---|---|---|
| Rs. 0 – Rs. 3 Lakh | 0% | Rs. 0 |
| Rs. 3 Lakh – Rs. 6 Lakh | 5% | Rs. 15,000 |
| Rs. 6 Lakh – Rs. 7,10,000 | 10% | Rs. 11,000 |
| Cess | 4% | Rs. 1,040 |
| Total Income Tax | Rs. 27,040 |
As seen above, with increase of Rs. 10,000, you have to pay Rs. 27,040 as tax with new tax regime which is not fair. Below is the tax calculation with marginal relief benefit, where the additional amount of Rs. 10,000 will be paid as tax excluding cess of 4%.
With Marginal Relief:
| Income Slab | Tax Bracket | Income Tax |
|---|---|---|
| Rs. 0 – Rs. 3 Lakh | 0% | Rs. 0 |
| Rs. 3 Lakh – Rs. 7 Lakh | – | Rs. 0 |
| Rs. 7 lakh – Rs. 7.1 Lakh | – | Rs. 10,000 |
| Cess | 4% | Rs. 400 |
| Total Income Tax | Rs. 10,400 |
So as seen above, you pay the additional amount of Rs. 10,400 as income tax instead of paying Rs. 27,040 with new tax regime with the help of marginal relief.
In this way, you are eligible for marginal relief for income up to Rs. 7,27,777 with new tax regime.
ALSO WATCH: Marginal Relief with New Tax Regime video
How to pay Zero Tax with Old and New Tax Regime?
We have seen the tax rebate under section 87A limits in above section. So with old tax regime, if your taxable income is Rs. 5 lakh or less, you don’t have to pay any income tax.
With new tax regime, if your taxable income is Rs. 7 Lakh or less, you don’t have to pay any income tax.
You can also use the income tax calculator in excel. Click below button to download income tax calculator 2024-25 in excel:
Conclusion
So this is the way you can calculate income tax and we have seen multiple income tax calculation examples. It depends on your income and investments to choose between old and new tax regime for FY 2024-25.
If you make investments and claim them as deductions, then you can go for old tax regime to pay less tax, and if you don’t make any investments or claim deductions, new tax regime is better for you with reduced tax slab rates.
Some more Reading:
- New vs Old Tax Regime Which is Better
- Marginal Relief in New Tax Regime
- Senior Citizens Income Tax Excel Calculator
Frequently Asked Questions
How much tax do I pay on 7.5 lakhs?
If 7.5 lakh is the taxable income than you pay Rs. 65,000 tax with old tax regime and Rs. 31,200 tax with new tax regime. And if you remove standard deduction so your taxable income becomes Rs. 7 lakh, then with old tax regime you pay Rs. 54,600 as tax and with new tax regime your income tax will be Rs. 0
Is New Tax Regime Slab Rates same for all age groups?
Yes new tax regime slab rates are same for all age groups. With old tax regime, your tax slab rates differ based on your age.
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Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
- Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
- Enter estimated Investments to check income tax with Old and New Tax Regime
- Save income tax details and track regularly
- Know how much to invest more to save income tax
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