New Tax Calculations Unveiled: Find Out Your Tax Liability Now

New Tax Calculations Unveiled: Find Out Your Tax Liability Now

The Union Budget 2025 introduced a revised tax structure under which individuals earning up to ₹12 lakh annually are exempt from paying income tax. However, for those earning above ₹12 lakh, the tax calculations are based on incremental slabs. This article explains the new regime in detail, using the tax breakdown shown in the table.

How the Tax is Calculated for Income Above ₹12 Lakh?

Under the new tax regime, income above ₹12 lakh is taxed incrementally across different slabs. Here’s a detailed breakdown of the calculations:

Key Tax Slabs

  • Income up to ₹4 lakh: Tax-free (0%)
  • Income from ₹4 lakh to ₹8 lakh: 5%
  • Income from ₹8 lakh to ₹12 lakh: 10%
  • Income from ₹12 lakh to ₹16 lakh: 15%
  • Income from ₹16 lakh to ₹20 lakh: 20%
  • Income above ₹20 lakh: 25%
  • Income above ₹24 lakh: 30%

Examples of Tax Calculations

To better understand, let’s break down the tax calculations for different income levels:

1. Income: ₹13 Lakh

  • ₹4 lakh: 0% tax = ₹0
  • ₹4 lakh (₹4L to ₹8L): 5% tax = ₹20,000
  • ₹4 lakh (₹8L to ₹12L): 10% tax = ₹40,000
  • ₹1 lakh (₹12L to ₹13L): 15% tax = ₹15,000

Total Tax: ₹75,000

2. Income: ₹15 Lakh

  • ₹4 lakh: 0% tax = ₹0
  • ₹4 lakh (₹4L to ₹8L): 5% tax = ₹20,000
  • ₹4 lakh (₹8L to ₹12L): 10% tax = ₹40,000
  • ₹3 lakh (₹12L to ₹15L): 15% tax = ₹45,000

Total Tax: ₹1,05,000

3. Income: ₹18 Lakh

  • ₹4 lakh: 0% tax = ₹0
  • ₹4 lakh (₹4L to ₹8L): 5% tax = ₹20,000
  • ₹4 lakh (₹8L to ₹12L): 10% tax = ₹40,000
  • ₹4 lakh (₹12L to ₹16L): 15% tax = ₹60,000
  • ₹2 lakh (₹16L to ₹18L): 20% tax = ₹40,000

Total Tax: ₹1,60,000

4. Income: ₹24 Lakh

  • ₹4 lakh: 0% tax = ₹0
  • ₹4 lakh (₹4L to ₹8L): 5% tax = ₹20,000
  • ₹4 lakh (₹8L to ₹12L): 10% tax = ₹40,000
  • ₹4 lakh (₹12L to ₹16L): 15% tax = ₹60,000
  • ₹4 lakh (₹16L to ₹20L): 20% tax = ₹80,000
  • ₹4 lakh (₹20L to ₹24L): 25% tax = ₹1,00,000

Total Tax: ₹3,00,000

Benefits of the New Regime

  1. Relief for Middle-Class Taxpayers: With no tax on incomes up to ₹12 lakh, this regime ensures significant relief for a large section of taxpayers.
  2. Simplified Tax Calculation: The incremental slab approach ensures transparency and makes it easier to understand tax liabilities.
  3. More Disposable Income: Lower taxes mean higher take-home pay, encouraging spending, savings, and investments.
  4. Boost to Economic Growth: With increased disposable income, the revised tax regime is expected to stimulate economic activity.

Important Considerations

  • Standard Deduction for Salaried Employees: Salaried individuals can claim a ₹75,000 standard deduction, further reducing their taxable income.
  • Comparison with Old Regime: While the new regime eliminates many deductions and exemptions, it offers lower tax rates, which may benefit some taxpayers.

Taxpayers are advised to compare both regimes before choosing the one that maximizes their savings.

The new tax regime aims to reduce the financial burden on taxpayers while simplifying the tax filing process. With incremental slabs and substantial relief for incomes up to ₹12 lakh, it’s a game-changer for the middle class.

By understanding the slab structure and planning your finances accordingly, you can make the most of these reforms and optimize your tax savings.


#NewTaxRegime #IncomeTax2025 #TaxRelief #Budget2025 #MiddleClassSavings

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