New Tax Regime 2025 - ZERO TAX on 16 Lakh Income with Deductions [EXPLAINED]
New Tax Regime 2025 - ZERO TAX on 16 Lakh Income with Deductions [EXPLAINED]
In this video by FinCalC TV we will see Income tax calculation using new tax regime slab rates in 2025-26 that allows few deductions in hindi. We will see how you don't have to pay any tax on 16 Lakh income with deductions of 4 lakh with new tax regime
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NEW TAX REGIME:
No Income Tax on Income between Rs. 0 to Rs. 4 lacs
5% Tax on Income between Rs. 4 lacs to Rs. 8 lacs
10% Tax on Income between Rs. 8 lacs to Rs. 12 lacs
15% Tax on Income between Rs. 12 lacs to Rs. 16 lacs
20% Tax on Income between Rs. 16 lacs to Rs. 20 lacs
25% Tax on Income between Rs. 20 lacs to Rs. 24 lacs
30% Tax on Income above Rs. 24 lacs
OLD TAX REGIME:
No Income Tax on Income between Rs. 0 to Rs. 2.5 lacs
5% Tax on Income between Rs. 2.5 lacs to Rs. 5 lacs
20% Tax on Income between Rs. 5 lacs to Rs. 10 lacs
30% Tax on Income above Rs. 10 lacs
Exemptions and Deductions available in New Tax Regime
Standard Deduction of Rs. 75,000 available for salaried employees
Deduction for employer’s contribution in NPS Account under Section 80CCD(2)
Home Loan Interest amount under Section 24 in case of let-out property
Deduction of amount paid or deposited in Agniveer Corpus Fund under Section 80CCH(2)
Transport allowance can be claimed in case of specially-abled person
Conveyance allowance for employees received to meet conveyance expenditures
Compensation received for cost of travel or tour
Daily Allowance received as compensation for cost of living in some other place compared to regular place of working
Gifts up to Rs. 5000
Exemption on voluntary retirement 10(10C), gratuity u/s 10(10) and Leave encashment u/s 10(10AA)
Exemptions and Deductions not available in New Tax Regime
There are multiple deductions and exemptions not available under New Tax Regime:
Investments included in Section 80C such as Provident Fund, Public Provident Fund, Life Insurance Premiums, 5 year Fixed Deposits, Equity Linked Saving Savings, etc. are not available in New Tax Regime
NPS (National Pension Scheme) under Section 80CCD(1B) which allows maximum of Rs. 50,000 deduction is not available in New Tax Regime
All other Deductions available under Chapter VI A is not available under New Tax Regime
Which is better New vs Old Tax Regime?
With annual income up to Rs. 12.75 lakh, your tax liability will be Rs. 0 with new tax regime and will be Rs. 1,87,200 with old tax regime considering standard deduction of Rs. 75,000 and 50,000 respectively. This makes it clear that new tax regime will be better from FY 2025-26.
Even if you claim deductions with old tax regime, it seems practically impossible to claim all deductions and get your taxable income below Rs. 5 lakh to pay zero income tax with old tax regime.
So new tax regime is clear winner from FY 2025-26, and it will be selected by default while you file Income Tax Return (ITR).
Is 80C available in New Tax Regime?
No. Section 80C investment options are not available in New Tax Regime. It is only available in old tax regime with maximum limit of Rs. 1.5 Lakhs in financial year.
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DISCLAIMER:
Examples and demo used are for Illustration purpose only and might not cover every detail of examples shown.
I Am Not A SEBI Registered Adviser. All The Information Provided By Me Are For Educational/Informational Purposes Only. We Do Not Take Any Responsibility For The Accuracy Of The Data But As It May Contain Typographic Or Other Errors And Inaccuracies And We Expressly Disclaim Liability For Any Errors On The YouTube Channel (FinCalC TV). Please consult your Financial Advisor before taking any decision or action in terms of your Finances.