Income Tax Calculation Formula in Excel For AY 2024-25

The income tax calculation formula is a little bit difficult if you are thinking to do it manually. Therefore, either you need the online income tax calculator or the excel file containing the formula. Thus, you can enter the required details in the offline file and see the tax liability after all deductions. You can download the excel file from the below section.

Online Income Tax Calculator for AY – 2024-25

Income Sources

Salary Income (₹): Rental Income (₹): Business/Professional Income (₹): Capital Gains (₹): Other Income (₹):

Choose Tax Regime:

Deductions

Section 80C (₹): Section 80D (₹): Section 24 (₹): Other Deductions (₹):

Current Income Tax Slabs for FY 2023-24

Old Regime

For individuals below 60 years:
- Up to ₹2,50,000: Nil
- ₹2,50,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
Additional Points:
- Section 80C deductions (up to ₹1,50,000) and other applicable deductions are available.

New Regime

Revised Tax Slabs (Post-Budget 2023):
- Up to ₹3,00,000: Nil
- ₹3,00,001 to ₹6,00,000: 5%
- ₹6,00,001 to ₹9,00,000: 10%
- ₹9,00,001 to ₹12,00,000: 15%
- ₹12,00,001 to ₹15,00,000: 20%
- Above ₹15,00,000: 30%
Features:
- Standard Deduction of ₹50,000 for salaried individuals is allowed.
- No other deductions (e.g., 80C) are applicable.

Download Income Tax Formula in Excel

By clicking the below download button, you can get the formula for income tax calculation in an excel file. The formula contains in the excel file is pertaining to only FY 2019-20 and for AY 2020-21. Therefore, you have to use it to calculate only for that particular period.

Download

File Credit > Apnaplan.com

How to use the File?

Download the Excel File
Open the file
Enter your Name and PAN
Enter your date of birth
Fill in the Income Details
Fill in the applicable deductions
The inbuilt formula of the file will give you the Net Tax Payable.

Enhancing the GST India News Income Tax Calculation Formula

1. Incorporating the Latest Tax Regime Updates

The Indian tax system has evolved with the introduction of dual tax regimes: the old and the new. For instance:

Old Regime: Includes various deductions and exemptions like Section 80C, 80D, and HRA, providing flexibility to taxpayers who plan their finances meticulously.
New Regime: Offers simplified tax slabs but eliminates most deductions and exemptions, except for the standard deduction of ₹50,000 and employer contributions to EPF.

2. Detailing Deductions and Exemptions

The old tax regime in India allows taxpayers to claim various deductions to reduce their taxable income. Here's a comprehensive list of common deductions available under the old regime:

Section 80C (Maximum Limit: ₹1,50,000)

Investments:

Public Provident Fund (PPF)
Employees' Provident Fund (EPF)
National Savings Certificate (NSC)
Tax-saving Fixed Deposits (5-year tenure)
Equity-Linked Savings Scheme (ELSS) mutual funds
Sukanya Samriddhi Yojana (SSY)
Senior Citizens Savings Scheme (SCSS)
Life Insurance Premiums

Expenses:

Repayment of principal on a home loan
Tuition fees for up to two children

Section 80CCC

Premiums paid towards annuity plans of LIC or other insurers for pension.

Section 80CCD

80CCD(1): Contributions to the National Pension System (NPS), up to 10% of salary for salaried individuals (20% for the self-employed).
80CCD(1B): Additional deduction of ₹50,000 for contributions to NPS.
80CCD(2): Employer's contribution to NPS (not included in the ₹1,50,000 limit).

Section 80D (Health Insurance Premiums)

Self, spouse, and children:

Up to ₹25,000 (₹50,000 if the insured is a senior citizen).

Parents:

Additional ₹25,000 (₹50,000 if parents are senior citizens).

Preventive Health Check-ups: Subsumed under the above limits, up to ₹5,000.

Section 80DD (For Disabled Dependents)

₹75,000 for expenses on medical treatment, training, or rehabilitation of a dependent with a disability (₹1,25,000 for severe disability).

Section 80DDB (For Specified Diseases)

Medical expenses for specific diseases:
₹40,000 (₹1,00,000 for senior citizens).

Section 80E (Interest on Education Loan)

Deduction for interest paid on loans for higher education (no upper limit).

Section 80EE (First-Time Home Buyers)

Additional deduction of ₹50,000 for interest on a home loan, subject to certain conditions.

Section 80EEA (Housing Loan Interest for Affordable Housing)

Additional deduction of ₹1,50,000 for loans sanctioned between specified dates, under affordable housing criteria.

Section 80EEB (Electric Vehicle Loan Interest)

Deduction of ₹1,50,000 for interest paid on loans for purchasing an electric vehicle.

Section 80G (Donations to Charitable Institutions)

Deduction for eligible donations, fully or partially exempt (50% or 100%, with or without limits).

Section 80GG (Rent Paid by Non-Salaried Individuals)

Deduction for rent paid, subject to conditions (maximum ₹5,000 per month or 25% of total income, whichever is lower).

Section 80GGA (Donations for Scientific Research and Rural Development)

Donations for approved projects.

Section 80GGB/80GGC

Donations to political parties or electoral trusts (100% deductible).

Section 80TTA (Interest on Savings Account)

Deduction of up to ₹10,000 for interest earned in savings accounts with banks or post offices.

Section 80TTB (Interest Income for Senior Citizens)

Deduction of up to ₹50,000 on interest from deposits for senior citizens.

Section 24 (Interest on Home Loan)

Deduction of up to ₹2,00,000 for interest paid on home loans for self-occupied property.

Section 10 (Other Exemptions)

Although not a deduction, the old regime allows exemptions such as:

House Rent Allowance (HRA)
Leave Travel Allowance (LTA)
Standard deduction of ₹50,000 for salaried individuals

By claiming these deductions strategically, taxpayers can significantly reduce their tax liability under the old regime. It's essential to check eligibility and ensure proper documentation for each deduction. For specific guidance, consult a tax professional or refer to the latest Income Tax Act provisions.

3. Expanding Coverage of Income Sources

In India, income sources are broadly classified under five categories, and each has its own set of tax treatments. These sources need to be accounted for while calculating total taxable income. Below is a comprehensive coverage of the various income sources and their implications under the Income Tax Act, considering updates from various sources such as the Income Tax Department, Groww, and ClearTax.

1. Income from Salary

Components: Salary income includes basic pay, house rent allowance (HRA), special allowances, and bonuses.
Taxable Elements:
HRA: Exempt up to the least of the following:
- Actual HRA received.
- 50% of salary (if living in a metro city) or 40% if living in a non-metro city.
- Rent paid minus 10% of salary.
Standard Deduction: A flat ₹50,000 is available for salaried individuals or pensioners.
Leave Travel Allowance (LTA): Exempt under specific conditions (only for travel within India).
Taxable Benefits: Some benefits like employer-provided accommodation, car for personal use, and stock options are subject to tax.

2. Income from House Property

Rentals: Income from property (rented out or self-occupied) is taxed under this head.
Self-Occupied Property: Taxable income is considered as NIL (notional rent) but can claim deductions for interest on home loans under Section 24.
Rented Property: Gross rent minus the standard deduction (30% of rent) and property taxes is taxable. If the property is rented out, the net income from rent is taxable.
Interest on Home Loan: A maximum of ₹2,00,000 can be claimed as a deduction for interest on loans for self-occupied property.

3. Income from Business and Profession

Business Income: Income from any business activity, whether as a sole proprietor or a partnership, is included. This could be from the sale of goods, services, or a combination of both.
Deductions: Costs such as raw material, salaries, rent, depreciation on business assets, and other operational expenses can be deducted from the gross income.
Presumptive Taxation: Under Section 44AD, small businesses with turnover under ₹2 crore can opt for presumptive taxation, where 8% of the turnover (or 6% for digital transactions) is considered taxable income.
Profession: Income from professions like law, medicine, consultancy, etc., is similarly taxed, but professionals can deduct expenses incurred for the profession (like office rent, equipment, etc.).

4. Capital Gains

Capital gains arise from the sale of capital assets like property, stocks, bonds, or mutual funds. Capital gains are classified into two categories:

Short-Term Capital Gains (STCG): Gains on assets sold within three years (for most assets) are considered short-term and taxed at specific rates (e.g., 15% for equity shares).
Long-Term Capital Gains (LTCG): Gains on assets held for more than three years are taxed at reduced rates. For example, the sale of equity shares or equity mutual funds is taxed at 10% on gains exceeding ₹1 lakh per year (for stocks, with indexation benefits).
Exemptions: Section 54 offers exemptions on the sale of a property if the gains are reinvested in buying or constructing another property.

5. Income from Other Sources

This is a residual category that includes income not specifically covered under the above heads. Common examples include:

Interest Income: From savings accounts, fixed deposits, recurring deposits, or government bonds.
Tax-Free Interest: Interest earned from specified government bonds or post-office schemes may be tax-free, subject to limits.
Dividend Income: Since 2020, dividend income is taxed in the hands of the shareholder at the applicable tax rates. A deduction of up to ₹10,000 is available under Section 80TTA for interest from savings accounts, and Section 80TTB provides ₹50,000 for senior citizens.
Gifts and Winnings: Any income from gifts (above ₹50,000 in value) or winnings from lotteries, casinos, or games are taxable under this head. However, some gifts (e.g., from relatives or on occasions like marriage) may be exempt from tax.

Conclusion

The Indian Income Tax system considers a wide range of income sources, each of which is taxed differently. The key categories of income include salary, house property, business, capital gains, and other miscellaneous income. Understanding the nuances of each source helps taxpayers optimize their tax liability through proper deductions and exemptions. Notably, tax planning tools, like those offered by Groww or ClearTax, can guide individuals in selecting the most tax-efficient strategies for their income sources.

4. Adding Tax-Slab-Specific Examples

Examples are a powerful way to illustrate complex concepts. Hence, this article include detailed scenarios for both tax regimes. For instance:

Scenario 1: A salaried individual earning ₹8 lakh annually with investments in PPF and ELSS (old regime) versus no deductions (new regime).
Scenario 2: A freelancer with ₹15 lakh in income and eligible deductions under Sections 80D and 80G.
Scenario 3: A retiree earning income from property rental and fixed deposits.

Scenario 1: A Salaried Individual Earning ₹8 Lakh Annually with Investments in PPF and ELSS (Old Regime) Versus No Deductions (New Regime)

Let’s break down and compare the tax calculations for a salaried individual earning ₹8 lakh annually, taking into account the available deductions under the old tax regime and contrasting that with the new tax regime, where no deductions are claimed.

Key Assumptions

Annual Salary: ₹8,00,000
Investments under Old Regime: PPF (Public Provident Fund) and ELSS (Equity-Linked Savings Scheme)
Deductions under Old Regime:
PPF: ₹1,50,000 (maximum limit under Section 80C)
ELSS: ₹1,50,000 (within the ₹1,50,000 limit of Section 80C)
No Deductions in New Regime: In the new tax regime, deductions under sections like 80C, 80D, etc., are not available, simplifying the tax computation but removing potential tax-saving avenues.

1. Tax Calculation Under the Old Regime

The old tax regime allows for deductions under various sections, including Section 80C for investments in instruments like PPF and ELSS. Under this scenario, the individual can use the maximum allowable deductions to reduce their taxable income.

Steps for Calculation (Old Regime):

Gross Income: ₹8,00,000
Deductions under Section 80C:
PPF: ₹1,50,000
ELSS: ₹1,50,000 (Note: This is part of the ₹1,50,000 limit under Section 80C)
Total Deductions: ₹3,00,000

Net Taxable Income = ₹8,00,000 (Gross Income) – ₹3,00,000 (Deductions)
= ₹5,00,000

Tax Calculation:

According to the Income Tax Slabs for FY 2023-24 (Assessment Year 2024-25), the tax slabs for individuals below 60 years under the old regime are as follows:

Up to ₹2,50,000: Nil
₹2,50,001 to ₹5,00,000: 5%
₹5,00,001 to ₹10,00,000: 20%

Based on a taxable income of ₹5,00,000, the individual will fall into the second slab (5% on ₹2,50,000):

Tax on ₹2,50,000 (₹5,00,000 - ₹2,50,000): ₹12,500

Additionally, a rebate under Section 87A is available for taxpayers with income up to ₹5,00,000:

Rebate of ₹12,500 (which reduces the tax liability to ₹0 for incomes of ₹5,00,000 or below).

Final Tax Payable (Old Regime): ₹0

The rebate ensures that the individual pays no tax on ₹5,00,000 income after considering the deductions and the 87A rebate.

2. Tax Calculation Under the New Regime

In the new tax regime, the individual cannot claim deductions like PPF, ELSS, or others. The tax computation is simplified but without the benefit of these tax-saving options.

Steps for Calculation (New Regime):

Gross Income: ₹8,00,000
No Deductions: Since deductions under 80C, 80D, etc., are not allowed in the new regime, the entire ₹8,00,000 is taxable.

Net Taxable Income = ₹8,00,000 (Gross Income)
= ₹8,00,000

Tax Calculation:

For a taxable income of ₹8,00,000, the tax breakdown would be:

Tax on ₹2,50,000 (₹2,50,000 to ₹5,00,000) = ₹12,500
Tax on ₹2,50,000 (₹5,00,000 to ₹7,50,000) = ₹25,000
Tax on ₹50,000 (₹7,50,000 to ₹8,00,000) = ₹7,500

Total Tax = ₹12,500 + ₹25,000 + ₹7,500 = ₹45,000

There is no rebate under Section 87A available in the new tax regime for incomes above ₹5,00,000, so the total tax payable remains ₹45,000.

Comparison of Tax Liability

Aspect	Old Regime (with deductions)	New Regime (without deductions)
Gross Income	₹8,00,000	₹8,00,000
Deductions	₹3,00,000 (PPF, ELSS)	₹0
Taxable Income	₹5,00,000	₹8,00,000
Tax Payable (Before Rebate)	₹12,500	₹45,000
Tax Rebate (Section 87A)	₹12,500	₹0
Final Tax Payable	₹0	₹45,000

Key Takeaways

Old Tax Regime:
- By claiming deductions for PPF and ELSS, the individual reduces their taxable income to ₹5,00,000, which makes them eligible for a tax rebate of ₹12,500 under Section 87A. As a result, the total tax liability is reduced to ₹0.
- Benefits: Deductions help in reducing taxable income, making this regime more beneficial for individuals with significant tax-saving investments.
New Tax Regime:
- The individual does not get the benefit of deductions like PPF or ELSS, and thus the entire ₹8,00,000 is taxable. The tax liability under the new regime is ₹45,000.
- Benefits: Simpler tax computation without the need to track and manage investments for deductions. However, the absence of deductions makes it less advantageous for those who have planned investments in tax-saving schemes.

Which is Better?

Old Regime is more beneficial for individuals who have significant investments in instruments eligible for deductions, such as PPF and ELSS, as they can reduce their taxable income.
New Regime might appeal to those who do not want to engage in tax-saving investments or have limited investments that qualify for deductions. It's also a good option for individuals who prefer a simplified process without the need to track various deductions.

This analysis demonstrates how the old and new tax regimes cater to different financial planning strategies. It also highlights the importance of understanding your personal finances and considering the impact of deductions when choosing between the two regimes.

Scenario 2: A Freelancer with ₹15 Lakh in Income and Eligible Deductions Under Sections 80D and 80E (Old Regime)

In this scenario, we will analyze the income tax calculation for a freelancer earning ₹15 lakh annually, eligible for deductions under Section 80D (Health Insurance Premium) and Section 80E (Interest on Education Loan). We'll compare the tax calculation under the old tax regime, where the individual can claim deductions, and under the new tax regime, where such deductions are not allowed.

Key Assumptions:

Annual Income: ₹15,00,000
Eligible Deductions:
Section 80D: Health insurance premium for self, spouse, and children: ₹25,000 (under normal conditions, up to ₹50,000 for senior citizens)
Section 80E: Interest on education loan: ₹1,50,000 (interest paid in the relevant financial year)
No Other Deductions are considered.

1. Tax Calculation Under the Old Regime

The old tax regime allows for various deductions such as those under Section 80D and Section 80E. Let’s see how these deductions can impact the taxable income.

Steps for Calculation (Old Regime):

Gross Income: ₹15,00,000
Deductions under Section 80D: ₹25,000 for health insurance premiums.
Deductions under Section 80E: ₹1,50,000 for interest on an education loan.

Total Deductions = ₹25,000 (80D) + ₹1,50,000 (80E) = ₹1,75,000

Net Taxable Income = ₹15,00,000 - ₹1,75,000 = ₹13,25,000

Tax Calculation:

According to the Income Tax Slabs for FY 2023-24 (Assessment Year 2024-25), the tax slabs for individuals below 60 years of age under the old regime are as follows:

Up to ₹2,50,000: Nil
₹2,50,001 to ₹5,00,000: 5%
₹5,00,001 to ₹10,00,000: 20%
₹10,00,001 to ₹15,00,000: 30%

Based on a taxable income of ₹13,25,000, we will calculate the tax as follows:

Tax on ₹2,50,000 (₹0 - ₹2,50,000) = ₹0
Tax on ₹2,50,000 (₹2,50,001 - ₹5,00,000) = ₹2,50,000 * 5% = ₹12,500
Tax on ₹5,00,000 (₹5,00,001 - ₹10,00,000) = ₹5,00,000 * 20% = ₹1,00,000
Tax on ₹3,25,000 (₹10,00,001 - ₹13,25,000) = ₹3,25,000 * 30% = ₹97,500

Total Tax Before Rebate = ₹12,500 + ₹1,00,000 + ₹97,500 = ₹2,10,000

There is no rebate under Section 87A for income above ₹5,00,000, so the tax payable is ₹2,10,000.

Final Tax Payable (Old Regime): ₹2,10,000

2. Tax Calculation Under the New Regime

The new tax regime simplifies the tax process by eliminating the need for deductions. Under this regime, tax rates are slightly lower but do not allow deductions under Section 80D, 80E, or any other sections.

Steps for Calculation (New Regime):

Gross Income: ₹15,00,000
No Deductions: The individual cannot claim any deductions for health insurance or education loan.

Net Taxable Income = ₹15,00,000 (entire income is taxable)

Tax Calculation:

For a taxable income of ₹15,00,000, the tax breakdown would be:

Tax on ₹2,50,000 (₹0 - ₹2,50,000) = ₹0
Tax on ₹2,50,000 (₹2,50,001 - ₹5,00,000) = ₹2,50,000 * 5% = ₹12,500
Tax on ₹2,50,000 (₹5,00,001 - ₹7,50,000) = ₹2,50,000 * 10% = ₹25,000
Tax on ₹2,50,000 (₹7,50,001 - ₹10,00,000) = ₹2,50,000 * 15% = ₹37,500
Tax on ₹2,50,000 (₹10,00,001 - ₹12,50,000) = ₹2,50,000 * 20% = ₹50,000
Tax on ₹2,50,000 (₹12,50,001 - ₹15,00,000) = ₹2,50,000 * 25% = ₹62,500

Total Tax Payable (New Regime) = ₹12,500 + ₹25,000 + ₹37,500 + ₹50,000 + ₹62,500 = ₹1,87,500

Final Tax Payable (New Regime): ₹1,87,500

Comparison of Tax Liabilities

Aspect	Old Regime (With Deductions)	New Regime (Without Deductions)
Gross Income	₹15,00,000	₹15,00,000
Deductions	₹1,75,000 (80D, 80E)	₹0
Taxable Income	₹13,25,000	₹15,00,000
Tax Payable (Old Regime)	₹2,10,000	₹1,87,500

Key Takeaways

Old Tax Regime:

With the deductions under Section 80D (health insurance premiums) and Section 80E (education loan interest), the individual reduces their taxable income to ₹13,25,000.
The final tax payable is ₹2,10,000 after considering the applicable tax slabs.
This regime is more beneficial for individuals who have significant tax-saving investments or eligible deductions.

New Tax Regime:

The individual does not benefit from deductions like those under Section 80D or 80E.
The final tax payable in the new regime is ₹1,87,500, which is lower than the old regime.
This regime is simpler and may be beneficial for individuals who do not have significant deductions or prefer not to invest in tax-saving instruments.

Which is Better?

Old Regime is more beneficial for individuals who have significant investments eligible for deductions (like health insurance and education loan interest) since it lowers taxable income.
New Regime might be more appealing for individuals who don’t want to bother with managing tax-saving investments or for those who have limited deductions available. The lower tax slabs may be attractive to some, but the inability to claim deductions limits the benefits for those with eligible deductions.

In this scenario, if the freelancer’s main objective is to minimize tax through deductions, the old tax regime would likely be more advantageous. However, the new regime might be easier to manage and more beneficial for those with fewer deductions.

Scenario 3: A Retiree Earning Income from Property Rental and Fixed Deposits

In this scenario, we are analyzing the income tax implications for a retired individual who earns income from property rental and fixed deposits (FDs). The calculation will be made under both the old tax regime, which allows various deductions, and the new tax regime, which simplifies the process but removes those deductions.

Let's break down how income from property rental and FDs is treated, and compare the benefits of both tax regimes.

Key Assumptions:

Rental Income: ₹6,00,000 per year
Interest from Fixed Deposits: ₹3,00,000 per year
Total Gross Income: ₹9,00,000
Eligible Deductions (Old Regime):
Section 80C: Maximum ₹1,50,000 (Investments like PPF, ELSS, etc.)
Section 80D: ₹25,000 for health insurance premium (for self, spouse, and children).
Section 24(b): Deduction of up to ₹2,00,000 on interest on home loan (if applicable).

In this case, we assume the retiree has a home loan and pays interest on it, which qualifies for Section 24(b) deductions.

1. Tax Calculation Under the Old Regime

Income from Rental Property:

Rental Income of ₹6,00,000 will be taxed under Income from House Property.
Under the old regime, the retiree can claim a deduction of 30% of the rental income as standard deduction for maintenance and repairs (as per Section 24).
Standard Deduction on Rental Income: 30% of ₹6,00,000 = ₹1,80,000
Net Rental Income = ₹6,00,000 - ₹1,80,000 = ₹4,20,000

Income from Fixed Deposits:

Interest income from Fixed Deposits is taxed under the head Income from Other Sources.
Interest on FDs: ₹3,00,000

Total Gross Income:

Net Rental Income: ₹4,20,000
Interest Income: ₹3,00,000
Total Gross Income = ₹4,20,000 + ₹3,00,000 = ₹7,20,000

Deductions Under the Old Regime:

Section 80C: ₹1,50,000 (Maximum deduction for investments like PPF, ELSS, etc.)
Section 80D: ₹25,000 for health insurance premiums
Section 24(b): ₹2,00,000 for home loan interest (assuming the retiree has a home loan)

Total Deductions = ₹1,50,000 (80C) + ₹25,000 (80D) + ₹2,00,000 (80E) = ₹3,75,000

Net Taxable Income:

Gross Income = ₹7,20,000
Deductions = ₹3,75,000
Net Taxable Income = ₹7,20,000 - ₹3,75,000 = ₹3,45,000

Tax Calculation (Old Regime):

Under the old tax regime for FY 2023-24 (Assessment Year 2024-25), the tax slabs for individuals below 60 years are as follows:

Up to ₹2,50,000: Nil
₹2,50,001 to ₹5,00,000: 5%
₹5,00,001 to ₹10,00,000: 20%

Since the taxable income is ₹3,45,000, it falls under the 5% slab.

Tax on ₹95,000 (₹3,45,000 - ₹2,50,000) = ₹95,000 * 5% = ₹4,750

There is no rebate under Section 87A, as the income is above ₹2,50,000.

Final Tax Payable (Old Regime): ₹4,750

2. Tax Calculation Under the New Regime

In the new tax regime, the retiree cannot claim deductions under Section 80C, 80D, or Section 24. The income is taxed as per the simplified tax slabs without the possibility of reducing the taxable income through deductions.

Steps for Calculation (New Regime):

Gross Income: ₹7,20,000
No Deductions: As per the new tax regime, no deductions for health insurance, home loan interest, or investment.

Net Taxable Income = ₹7,20,000

Tax Calculation (New Regime):

Under the new tax regime, the following slabs apply:

Up to ₹2,50,000: Nil
₹2,50,001 to ₹5,00,000: 5%
₹5,00,001 to ₹7,50,000: 10%

For a taxable income of ₹7,20,000, the tax breakdown is:

Tax on ₹2,50,000 (₹0 - ₹2,50,000) = ₹0
Tax on ₹2,50,000 (₹2,50,001 - ₹5,00,000) = ₹2,50,000 * 5% = ₹12,500
Tax on ₹2,20,000 (₹5,00,001 - ₹7,20,000) = ₹2,20,000 * 10% = ₹22,000

Total Tax Payable (New Regime) = ₹12,500 + ₹22,000 = ₹34,500

Final Tax Payable (New Regime): ₹34,500

Comparison of Tax Liabilities

Aspect	Old Regime (With Deductions)	New Regime (Without Deductions)
Gross Income	₹7,20,000	₹7,20,000
Deductions	₹3,75,000 (80C, 80D, 24(b))	₹0
Taxable Income	₹3,45,000	₹7,20,000
Tax Payable (Old Regime)	₹4,750	₹34,500

Key Takeaways

Old Tax Regime:

The retiree can avail deductions like Section 80C (for investments such as PPF), Section 80D (health insurance), and Section 24(b) (home loan interest), which significantly lower their taxable income.
With a taxable income of ₹3,45,000, the final tax payable is only ₹4,750, which is much lower than under the new regime.
Benefits: The old regime is advantageous for those who can avail deductions, especially retirees who may be making investments and paying premiums for health insurance.

New Tax Regime:

In the new tax regime, the retiree cannot claim any deductions, leading to a higher taxable income of ₹7,20,000.
The final tax payable in the new regime is ₹34,500, which is substantially higher than under the old regime.
Benefits: The new tax regime is simpler and may appeal to those who do not make many deductible investments or do not want to engage in tax-saving activities. However, in this case, the lack of deductions results in a higher tax liability.

Which Regime is Better for a Retiree?

Old Regime is clearly better for this retiree, as the available deductions significantly reduce the taxable income, resulting in a much lower tax liability.
New Regime may appeal to retirees who have fewer tax-saving investments or prefer a simpler tax filing process, but for this individual, the old regime is far more beneficial in terms of tax savings.

In general, retirees with substantial investments, health insurance, or home loans should consider opting for the old tax regime to maximize their tax savings.

5. Guidance on Tax Compliance

While calculating taxes is crucial, taxpayers often seek advice on compliance.

6. Addressing Common User Queries

FAQ section to address common doubts such as:

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