No income tax will be paid by you if your income is Rs. 7.5 Lakh in FY 2023-24. How? You get standard deduction of Rs. 50,000 (if salaried or pensioner) so taxable income becomes Rs. 7 Lakh. Next, based on the new tax regime, your income tax is Rs. 25,000 on 7 lakh taxable income. This tax is cancelled due to rebate you get of maximum Rs. 25,000 with new tax regime under section 87A so you pay no income tax.
We will see these calculations with examples and compare old and new regime as well. Also you can download the income tax excel calculator from bottom of this article.
No Income Tax with Tax Rebate under Section 87A Video
As seen in above video, standard deduction of Rs. 50,000 was introduced in FY 2023-24 with new regime as well. Apart from this, Tax Rebate limit was also extended to Rs. 7 lakh income on new regime.
How to Calculate Taxable Income?
To calculate income tax, you need to calculate taxable income on which actual tax is calculated.
Taxable income calculation formula is:
- Taxable Income = Gross Income – Investments
While you can make investments and deductions with old regime, but new regime does not allow deductions except standard deduction of Rs. 50,000 applicable from FY 2023-24 onwards.
So below is the table of calculations with Old and new regime.
|Item||Old Regime||New Regime|
|Gross Income||Rs. 7,50,000||Rs. 7,50,000|
|Standard Deduction||Rs. 50,000||Rs. 50,000|
|Other Deductions||Rs. 0 (options available)||Rs. 0|
|Taxable Income||Rs. 7,00,000||Rs. 7,00,000|
|Tax Rebate under Section 87A||Rs. 0||Rs. 25,000|
|Income Tax||Rs. 54,600||Rs. 0|
Important points about above calculation table:
- These calculations are applicable for FY 2023-24 onwards
- Standard Deduction is available in both tax regimes
- Note that you get more deduction options to save income tax with old regime that you can consider
- Tax Rebate limit for Old tax regime is still Rs. 5 Lakh, on which no income tax need to be paid. If taxable income is above 5 lakh than tax rebate is not available with old regime
- Tax Rebate limit in New tax regime is Rs. 7 lakh, which means no income tax on taxable income up to Rs. 7 lakh in FY
- You can use below income tax calculator to know how tax is calculated with old and new regimes
Income Tax Slab Rates for FY 2023-24
Let us now see the income tax slab rates for FY 2023-24:
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%|
New Tax Regime
|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 FY 2023-24 for age up to 60 years. Note that on income of 7.5 lakh, you belong to 20% slab rate with old regime but 10% slab rate with new regime.
New tax regime have reduced tax slab rates but do not allow much deductions except standard deduction to salaried and pensioners only.
ALSO READ: Income Tax Slab Rates for all age groups
No Income Tax up to Rs. 7.5 Lakh Calculation
Let us now see how income tax will be zero with 7.5 lakh income. Below is the screenshot from excel calculator:
As seen above, for income of 7.5 lakh and investments of Rs. 50,000 (standard deduction), taxable income becomes 7 lakh with both tax regimes.
And slab wise details are also mentioned in the above image.
Tax rebate is Rs. 0 with old regime since taxable income goes above Rs. 5 lakh. Note that if taxable income goes above 5 lakh, you have to pay 5% tax as well in 5% slab. So total income tax is Rs. 54,600 with old tax regime. You get maximum tax rebate of Rs. 12,500 with old regime if taxable income is 5 lakh or below.
With new regime, since taxable income is 7 lakh, tax rebate of maximum Rs. 25,000 is applicable so zero tax with new regime.
ALSO READ: Old vs New Tax Regime Which is Better
Download Income Tax Calculator FY 2023-24 in Excel
Fill below form to download income tax calculator in excel shown above:
In which income there is no tax?
Based on above calculations, if your income is 5 lakh or below, you don’t have to pay tax with old regime. And with new regime, for income up to Rs. 7 lakh, there is no income tax.
Here, you don’t have to make any investments as well to make your tax zero.
How can I pay zero tax in India?
If you are selecting old regime, you have to get your income below 5 lakh to pay zero tax. And with new regime, your income must be below 7 lakh for zero tax in FY 2023-24.
So to conclude, below are the key important points:
- Based on your income and investments, your tax regime must be selected
- Old regime helps you to save income tax with multiple investment options
- New tax regime has reduced tax slab rates
- If your income is up to 11 lakh, still you don’t have to pay income tax with various investments = Rs. 6 lakh
- Tax rebate limit in old regime is Rs. 12,500 (Rs. 5 lakh income) and Rs. 25,000 (Rs. 7 lakh income)
Comment below which tax regime you will choose and why
Some more Reading
- Tax Rebate under Section 87A Explained
- Section 80C Deductions List
- Senior Citizens Tax Benefits
- New Tax Regime Benefits
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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 2023-24 and previous FY 2022-23
- 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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