Income Tax Calculations: The financial year 2024-25 will close at the end of this month.

Taxpayers can choose the existing tax regime and the old tax regime to file their income tax return (ITR) for this financial year.

They may pick either of them based on their investments or the income slab.

However, the scenario will change from the next financial year (FY2526) when the proposed tax regime will be implemented.

The proposed tax regime, announced in Budget 2025, offers a tax-free income limit of Rs 12 lakh to non-salaried individuals and Rs 12.75 lakh to salaried individuals.

Let’s go through the salient features of the old, the existing new, and the proposed new tax regimes, and what will be the estimated income tax you need to pay in all 3 regimes if your income is Rs 7 lakh, Rs 14 lakh, Rs 21 lakh, Rs 28 lakh, and Rs 35 lakh. See details- 

Old tax regime

The old tax regime offers a tax-free income of Rs 5 lakh after taking advantage of the rebate.

It offers a tax advantage on long-term investments under Section 80C of the Income Tax Act, 1961.

Investors can get a tax benefit on the principal and interest paid on a home loan, premiums paid for insurance policies, and medical insurance.

Existing new tax regime

Introduced in Budget 2020-21 speech, the new tax regime is the default tax choice for taxpayers. The tax regime offers a tax-free income of Rs 7 lakh. 

It offers tax benefits on employer contributions to the employee’s NPS account (maximum 14 per cent of the basic pay).  

Proposed New Regime

Finance Minister Nirmala Sitharaman introduced the tax regime in her Budget 2025 speech in February.

The striking thing about the proposed regime is that income up to Rs 12 lakh is tax-free for non-salaried individuals and Rs 12.75 lakh for salaried individuals.

It will be applicable from Financial Year 2025-26.

Income tax on Rs 7 lakh income

Old tax regime- Rs 44,200
Existing new tax regime- 0 
Proposed new tax regime- 0
 

Income tax on Rs 14 lakh income

Old tax regime- Rs 2,26,200
Existing new tax regime- Rs 1,09,200
Proposed new tax regime- Rs 81,900 

Income tax on Rs 21 lakh income

Old tax regime- Rs 4,44,600
Existing new tax regime- 3,09,400
Proposed new tax regime- Rs 2,14,500 

Income tax on Rs 28 lakh income

Old tax regime- Rs 6,63,000
Existing new tax regime- Rs 5,27,800
Proposed new tax regime- Rs 4,13,400

Income tax on Rs 35 lakh income

Old tax regime- Rs 8,81,400
Existing new tax regime- Rs 7,46,200
Proposed new tax regime- Rs 6,31,800