INCOME TAX 2025 (FILING ITR JUL 25 )

 INCOME TAX PROVISIONS FOR FINANCIAL YEAR 2024-25 (AY 2025-26)

(NOTE - This post is further to our post (CLICK) for past FY in this site ) )

1. For the FY 2024-25 (current) even though not many changes have been made from the previous year,  the New Regime has further been made more attractive and beneficial for a larger segment 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 as compared to FY 2023-24.

2.  Under the New REGIME, the  tax slabs as given later in this post, have been revised to make it more popular for being less taxing than the OLD REGIME that stands unchanged for the last many years. 

3. In addition, for those opting for the NEW REGIME the Standard deductions for the salaries and pensioners has been increased to 75000, as also for the Family pensioners opting for NEW REGIME the deduction under Sec 57(III) has been increased from 15000 to 25000 or 30% of Family pension which ever is lower. No other deductions are permitted as applicable to pensioners. However the other  deductions permitted under the New Regime are given in our earlier post (CLICK)  of the previous year (FY 2023-24) that 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 after taking into consideration the entitled deductions in the REGIMES. 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 - NEW REGIME

There are many methods "On line" as well as manual for calculation of the Tax under the two Regimes turn by turn. We are much pleased to present our simple method, devised by our techy team member in the lay man's language for ease of knowing your option with least of efforts in five minutes, that too accurately. 

Before we explain the methodology, we need to firstly work out our Gross Total Income from all sources as usual, Secondly jot down your deductions applicable for OLD REGIME as we have been doing till date (help is also available in the last years post in this regard) and Thirdly the applicable deduction for REVISED NEW REGIME if you are a salaried employee or a pensioner. as explained above. 

These three items are the only figures you need to know to proceed further as given in succeeding paras. Having arrived at the Taxable Income let us proceed to calculate the basic tax before edn cess of 4%using the flow charts as under :-

                            NEW SLABS                                CALCULATION - FLOW CHART

The New Slabs as well as the Flow Chart for calculation of Income tax are self explanatory as such no illustrations are required. However the past web post as mentioned below in the succeeding paras may be referred to.

       It may be noted that I-Tax on Rs 15 Lakh works to 140000/- and any amount above 15 Lakh the tax will be 140000 plus 30% of amount that exceeds 15 lakh.

     We are not mentioning here the surcharge on tax where taxable income is 50 Lakh or more. As pensioners most us us will remain below 50 lakhs.

      TAX REBATE - Please Note that There is no Tax chargeable under the New Regime if the Taxable Income is below 7 Lakhs as the rebate in tax is provided under Sec 87A.  

      MARGINAL REBATE - Under the NEW REGIME in case your Taxable Income works out to 701000/- the Tax calculated will be 20000+1000*10%  ie Rs 20100/- for an increase of just Rs 1000 above 7 Lakh where the tax is ZERO.  Under such circumstances where the Taxable income is marginally above Seven Lakhs, Marginal Rebate has been introduced only in NEW REGIME to limit your tax payable if your Taxable Income is between Rs 700000/- and Rs 722200. Under this case the Payable Tax is limited by the Marginal Rebate so as to be equal to only the amount that exceeds Rs 7 Lakh. In the example cited above the Tax payable will only be Rs 1000/- and not Rs 20100 as gets calculated.

ON LINE TAX CACULATOR TOOL - We will soon be bringing out an ON-LINE TOOL to calculate your Taxes under both the REGIMES.

6.  OLD REGIME - CALCULATIONS -

       Please go to the link and open the web page for details of calculations under the old regime.

               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.

 TAX REBATE - Please Note that under the old regime there will be ZERO TAX upto Taxable Income 0f 5 Lakhs owing to rebate in tax is provided under Sec 87A.

       NO MARGINAL RELIEF IS APPLICABLE UNDER OLD REGIME.

CESS 4% on Tax -   To be in addition to the TAXES calculated above under both the regimes. We are not discussing the Surcharge on TAX for income above 50 Lakhs in this post.

 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 rates of Tax etc.

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