The Income tax (I-T) department has now added a tax calculator on its website to help citizens compute their tax liability under both old as well as new tax regimes.
This is meant to help the taxpayers assess which regime will lead to a lower tax liability: old or new. To be able to access the calculator, one has to visit the income tax’s official portal (https://incometaxindia.gov.in/) and click the link.
As the link opens, one can find that the assessment year is pre-fed (i.e., 2024-25) and cannot be altered. Then one has to enter other keys details which relate to the tax payer's status: individual, HUF or AOP/BOI/ AJP.
After this, the tax payer is meant to share their residential status: resident, non-resident or not ordinary resident.
Following this, one has to enter gross salary after deducting allowances exempted under both regimes.
The tax calculator then prompts the tax payer to enter other details such as income from self-occupied house property, income other than salary and special rate income, and other eligible deductions.
As all the details are entered, the calculator shows income tax after relief under section 87A. After surcharge and other cess (health & education) are added, total tax liability is calculated under both the regimes.
Finally, it shows the total savings in the new regime, if any.
It is vital to note that Finance Bill has introduced new tax regime — introduced in April 2020 under section 115BAC — as a default regime. However, one can still opt for the old tax regime. Under the new tax regime, a lower rate of tax is applicable, but one has to let go of tax exemptions in the new regime.
In the new regime, there is no tax liability up to ₹7 lakh. And when the income is more than ₹7 lakh, the new tax slab stipulates that there will be a tax rate of 5 percent for income between ₹3 lakh and ₹6 lakh. Then for every increase of ₹3 lakh income, rate of tax increases by 5 percent.
This means 10 percent tax is applicable for income between ₹6-9 lakh; 15 percent for ₹9-12; 20 percent for ₹12-15 lakh.
Finally, the maximum rate of 30 percent is applicable for tax payers with income of more than ₹15 lakh.