Which Income Tax Regime is Better for 10 Lakh Income in 2024? Old Tax Regime Vs New Tax Regime [June 2024]

When it comes to choosing the right income tax regime for an annual income of 10 lakh rupees in 2024, it's essential to understand the differences between the old tax regime and the new tax regime. Both regimes have their advantages and it depends on various factors such as eligible deductions and exemptions.

Before you get to the details, try out this Income tax calculator to find out your current tax liability .

What is the Old Tax Regime?

The old tax regime allows taxpayers to avail of various deductions and exemptions, such as those under sections 80C, 80D, and housing loan interest. However, it has higher tax rates compared to the new regime.

What is the New Tax Regime?

The new tax regime offers lower tax rates but eliminates most deductions and exemptions. It is designed to simplify the tax filing process.

Income Tax Calculation for 10 Lakh Income in 2024

Let's calculate the income tax liability for an annual income of 10 lakh rupees under both the old and new tax regimes.

1. Old Tax Regime Calculation

1. Total Income: ₹10,00,000
2. Deductions:

• Section 80C (PF, PPF, Life Insurance, etc.): ₹1,50,000
• Section 80D (Medical Insurance): ₹25,000
• Other Deductions (e.g., NPS, Home Loan Interest): ₹25,000
• Taxable Income: ₹10,00,000 - ₹2,00,000 = ₹8,00,000

Income Tax Slab for FY 23-24 (Old Regime)

• Up to ₹2,50,000: Nil
• ₹2,50,001 - ₹5,00,000: 5% of ₹2,50,000 = ₹12,500
• ₹5,00,001 - ₹10,00,000: 20% of ₹3,00,000 = ₹60,000

Total Tax Liability: ₹12,500 + ₹60,000 = ₹72,500

2. New Tax Regime Calculation

1. Total Income: ₹10,00,000
2. Deductions: None (under the new regime)

Income Tax Slab for FY 23-24 (New Regime)

• Up to ₹2,50,000: Nil
• ₹2,50,001 - ₹5,00,000: 5% of ₹2,50,000 = ₹12,500
• ₹5,00,001 - ₹7,50,000: 10% of ₹2,50,000 = ₹25,000
• ₹7,50,001 - ₹10,00,000: 15% of ₹2,50,000 = ₹37,500

Total Tax Liability: ₹12,500 + ₹25,000 + ₹37,500 = ₹75,000

Which Tax Regime is Better?

Old Tax Regime vs. New Tax Regime

• Old Tax Regime: Total tax liability = ₹72,500
• New Tax Regime: Total tax liability = ₹75,000

Analysis

For an annual income of 10 lakh rupees, the old tax regime results in a slightly lower tax liability compared to the new tax regime, provided the taxpayer can claim sufficient deductions and exemptions.

Recommendation

If you are able to utilize deductions and exemptions under sections like 80C, 80D, etc., the old tax regime might be more beneficial. However, if you prefer a simpler tax filing process and do not have significant deductions, the new tax regime could be more convenient.

Conclusion

Choosing between the old tax regime and the new tax regime depends on your individual financial situation. For an income of 10 lakh rupees in 2024, the old regime offers a marginally lower tax liability if deductions are maximized. Always use an income tax calculator available on the income tax portal, incometax.gov.in, to compare your tax liability under both regimes.

Ensure your PAN card is linked with your Aadhar and keep track of your income tax returns 2024. Visit the income tax portal for detailed information and e-file your taxes seamlessly.

By incorporating these keywords and understanding the nuances of both tax regimes, you can make an informed decision that best suits your financial needs.

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Author - Abhishek Sonawane

Abhishek Sonawane, an MBA graduate from the prestigious Indian Institute of Management Visakhapatnam(IIMV), brings over ten years of experience in the finance domain. His extensive background includes various roles in financial management and strategy, providing him with a comprehensive understanding of the financial landscape. Abhishek’s expertise and dedication to financial education make him an authoritative voice in personal finance, helping readers make informed financial decisions.