INCOME TAX 2025 (Under Construction )

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

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

1. In the Budget of  FY 2024-25 (current) even though there have not been many changes yet the New Regime has been further made more attractive and beneficial fo a larger population 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 

2.  Under the New REGIME, the  tax slabs as given later in this post, have been revised so as to make the  NEW REGIME more popular for being lesser taxing than the OLD REGIME that stands unchanged for the last many years. The REVISED NEW REGIME is made more beneficial by adjusting the lower slabs, the benefit continues for higher slabs as well.

3. In addition, the Standard deduction for the salaries and pensioners have been increased to 75000 from existing 50000 for the New Regime only. The deduction under sec 57(III) for Family Pensioners has also been increased from 15000 to 25000 or 30% of Family pension which ever is lower for the New Regime only . No other deductions are permitted for the existing pensioners. The other deductions permitted under the New Regime are given in our earlier post 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 to pick. 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 - FLOW CHART

                            NEW SLABS                                CALCULATION - FLOW CHART

The New Slabs as well as the Flw Chart for calculation of Income tax are self ezplanatory as such no illustrations are required. However the past web post as mentioned below in the succeeding paras may be refered 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 above 15 lakh.

     We are not mentioning here the surcharge on tax where taxable  income is 50 Lakh or more. 

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.

 

CESS 4% on Tax -   To be in addition to the basic tax calculated above

 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.