Earning Rs. 10 lakhs in India is a significant achievement, but it also comes with tax liabilities under both the old and new income tax regimes. Whether you are a salaried professional or a freelancer, understanding the nuances of income tax above 10 lakhs is crucial to ensure compliance, optimize your finances, and avoid unnecessary burdens. Here are the details of income tax calculation for income levels above Rs. 10 lakhs that will help you file your Income Tax Returns (ITR) in the FY 2024-25 easily.
The New Tax Regime, introduced in Budget 2020, was further refined in the 2023 Budget, offering some key changes for the financial year 2024-25 (Assessment Year 2025-26).
NOTE: The government allows you to choose between the old and new tax regime, with the new tax regime as the default choice for filing your ITR in the Financial Year 2023-24.
Increased Basic Exemption Limit: The new regime offers a higher basic exemption limit of Rs. 3 lakhs compared to Rs. 2.5 lakhs in the old regime.
Simplified Tax Structure: The new regime eliminates several deductions and exemptions available in the old regime.
Lower Tax Rates for Certain Income Brackets: The new regime has lower tax rates for income brackets above Rs. 5 lakhs compared to the old regime.
For Example: The tax rate for income between Rs. 5 lakhs and Rs. 6 lakhs is 5% in the new regime compared to 20% in the old regime.
In order to calculate the income tax above Rs. 10 lakhs, you need to understand the tax slab rates for the Old vs. New Income Tax Regime. This will also help you to decide the tax regime for you while filing your Income Tax Returns (ITR) or paying the Tax Deduction at Source (TDS).
The following table helps you to understand the income tax regime for Financial Year 2024-25 and learn the tax on Rs. 10 lakh income and above:
Income Tax Slab | Income Tax Rate (in % p.a.) | ||||
Old Tax Regime (FY 2024-25) | New tax Regime (until 31 March 2023) | New Tax Regime (since 01 April 2023) | |||
For Individuals/ HUFs/ NRIs (age < 60 years) | For Individuals/ HUFs/ NRIs (age 60 - 80 years) | For Individuals/ HUFs/ NRIs (age > 60 years) | |||
0 – Rs. 2.5 lakhs | NIL | NIL | NIL | NIL | NIL |
Rs. 2.5 lakhs – Rs. 3 lakhs | 5% (Rebate u/ Section 87A is available) | NIL | NIL | 5% (Rebate u/ Section 87A is available) | NIL |
Rs. 3 lakhs – Rs. 5 lakhs | 5% (Rebate u/ Section 87A is available) | 5% (Rebate u/ Section 87A is available) | NIL | 5% (Rebate u/ Section 87A is available) | 5% (Rebate u/ Section 87A is available) |
Rs. 5 lakhs – Rs. 6 lakhs | 20% | 20% | 20% | 10% | 5% (Rebate u/ Section 87A is available) |
Rs. 6 lakhs – Rs. 7.5 lakhs | 20% | 20% | 20% | 10% | 5% (Rebate u/ Section 87A is available) |
Rs. 7.5 lakhs – Rs. 9 lakhs | 20% | 20% | 20% | 15% | 10% |
Rs. 9 lakhs – Rs. 10 lakhs | 20% | 20% | 20% | 15% | 15% |
Rs. 10 lakhs – Rs. 12 lakhs | 30% | 30% | 30% | 20% | 15% |
Rs. 12 lakhs – Rs. 12.5 lakhs | 30% | 30% | 30% | 20% | 20% |
Rs. 12.5 lakhs – Rs. 15 lakhs | 30% | 30% | 30% | 25% | 20% |
Rs. 15 lakhs & above | 30% | 30% | 30% | 30% | 30% |
Difference between pre-budget and post-budget tax slab
Tax Slab for FY 2023-24 | Tax Slab | Tax Slab for FY 2024-25 | Tax Slab |
Upto ₹ 3 lakh | Nil | Upto ₹ 3 lakh | Nil |
₹ 3 lakh - ₹ 6 lakh | 5% | ₹ 3 lakh - ₹ 7 lakh | 5% |
₹ 6 lakh - ₹ 9 lakh | 10% | ₹ 7 lakh - ₹ 10 lakh | 10% |
₹ 9 lakh - ₹ 12 lakh | 15% | ₹ 10 lakh - ₹ 12 lakh | 15% |
₹ 12 lakh - ₹ 15 lakh | 20% | ₹ 12 lakh - ₹ 15 lakh | 20% |
More than 15 lakh | 30% | More than 15 lakh | 30% |
A surcharge is a tax over the income tax payable for an assessee falling in the high-income bracket.
Following are the taxable income ranges of old and new tax regimes for which the applicable surcharge rates are:
Surcharge for FY 2023-24 (Assessment Year 2024-25) | ||
Income Range | Surcharge Rates for Old Tax Regime 2023-24 | Surcharge Rates for New Tax Regime 2023-24 |
> Rs. 50 Lakhs to < Rs. 1 Crore | 10% | 10% |
> Rs. 1 Crore to < Rs. 2 Crores | 15% | 15% |
> Rs. 2 Crores to < Rs. 5 Crores | 25% | 25% |
> Rs. 5 crores to < Rs. 10 Crores | 37% | 25%* |
> Rs. 10 Crores above | 37% | 25%* |
*Union Budget 2023 limits the highest surcharge rates at 25% per annum.
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
Tax Deductions/ Exemptions | Details | Old Tax Regime | Previous Tax Regime | New Tax Regime (Applicable from 01 April 2023) |
---|---|---|---|---|
Income Limit for Tax Rebate | Provided for a specific income limit | Rs. 5 lakhs | Rs. 5 lakhs | Rs. 7 lakhs |
Section 87A | 100% rebate up to Rs. 25,000 for income up to Rs. 7 lakhs | Rs. 12,500 | Rs. 12,500 | Rs. 25,000 |
Standard Deduction | Rs. 50,000 for Salaried Class individuals | Rs. 50,000 | NA | Rs. 50,000 |
Effective Tax-Free Salary Income | After deductions and exemptions on salary | Rs. 5.5 lakhs | Rs. 5 lakhs | Rs. 7.5 lakhs |
Standard Deduction on Family Pension | Lower of Rs. 15,000 or 1/3rd of pension amount for Pensioners | Rs. 15,000 | Rs. 15,000 | Rs. 15,000 |
HRA Exemption | Applies to HRA allowance for salaried employees | YES | NO | NO |
Transport Allowance | Applicable to Specially Abled individuals | YES | YES | YES |
Conveyance Allowance | For travel to work or on transfer | YES | YES | YES |
Entertainment Allowance & Professional Tax | Deductions on entertainment allowance and professional tax | YES | NO | NO |
Perquisites for Official Purposes | Deductions on perquisites paid for office purposes | YES | YES | YES |
Section 80CCD(1) | Employee's contribution to the NPS Account | YES | NO | NO |
Section 80CCD(2) | Employer's contribution to the NPS account of an employee | YES | YES | YES |
Section 80C | ULIP/ ELSS/ LIC/ PPF/ Tax-Saver FDs/ Child Tuition Fee | YES | NO | NO |
Section 80D | Medical insurance premium | YES | NO | NO |
Section 80E | Interest on education loan | YES | NO | NO |
Section 80 EEB | Interest on Electric Vehicle (EV) loan | YES | NO | NO |
Section 80G | Donations to political parties | YES | NO | NO |
Section 80JJAA | When new employees are employed | YES | YES | YES |
Section 80U | For disabled individuals | YES | NO | NO |
Other Chapter VI-A Deductions | Under Chapter VI-A of the IT Act, 1961 | YES | NO | NO |
Section 32 | Depreciation on tangible assets (excluding additional depreciation) | YES | YES | YES |
Section 24(B) | Interest on home loan for self-occupied or vacant property | YES | NO | NO |
Section 24(A) | Interest on home loan for letting out property | YES | YES | YES |
Section 80 CCH | Contributions to Agniveer Corpus Fund | YES | NOT EXISTED | YES |
Gifts | Up to Rs. 50,000 | YES | YES | YES |
Section 10(10C) | Voluntary retirement amount | YES | YES | YES |
Section 10(10) | Gratuity amount | YES | YES | YES |
Section 10(10AA) | Leave encashment | YES | YES | YES |
For example, Mr Prateek has an annual salary of Rs. 10 lakhs.
As per the old tax regime, the total investments made by him under Section 80C of the Income Tax Act, 1961, is Rs. 1,50,000 under the following options:
ELSS (Equity Linked Savings Scheme)
LIC premium
PF (Provident Fund)
Home loan principal instalment (Home loan interest of Rs. 75,000 has been paid by him in the financial year 2021 – 2022)
Mr Prateek also purchased medical insurance of Rs. 28,000 in his and his spouse's names apart from the Section 80C investments.
Mr. Prateek can claim the above deductions if he opts for the old tax regime, whereas deductions are not allowed in the new tax regime.
Let us understand the tax flow of Mr Prateek in both tax regimes through a table:
Details | Old Tax Regime | New Tax Regime |
Gross Income | Rs. 10,00,000 | Rs. 10,00,000 |
Deductions: | ||
Under Section 80C | Rs. 1,50,000 | – |
Under Section 80D | Rs. 25,000 | – |
Under Section 24(b) | Rs. 75,000 | – |
Total Taxable Income | Rs. 750,000 | Rs. 1,000,000 |
Old Tax Slab Regime | ||
Rs. 0 to 2.5 Lakh | – | – |
Rs. 2.5 to 5 Lakh @ 5% | Rs. 12,500 | -- |
Rs. 5 to 7.5 Lakh @ 10% | Rs. 25,000 | -- |
New Tax Slab Regime | ||
Rs. 0 to 3 lakh | -- | 0 |
Rs. 3 to 6 lakh @ 5% | -- | Rs. 15,000 |
Rs. 6 to 9 lakhs @ 10% | -- | Rs. 45,000 |
Rs. 9 lakhs to 10 lakhs @ 15% | -- | Rs. 15,000 |
Income Tax | Rs. 37,500 | Rs. 75,000 |
Cess @ 4% | Rs. 1,500 | Rs. 3,000 |
Total Tax Levied | Rs. 39,000 | Rs. 78,000 |
The income tax on Rs. 10 lakh income is a crucial aspect of financial planning and fiscal responsibility. Understanding the applicable tax rates and deductions is essential for individuals to optimize their tax liabilities. It is advisable for taxpayers to stay informed about any changes in tax laws and leverage available exemptions to maximize their take-home income while fulfilling their tax obligations.
Choosing the right tax regime between the old and new tax regime
Maximizing eligible deductions and exemptions
Planning your income and investments strategically
New Regime:
No tax is payable on income of up to Rs. 3 lakhs
Income of up to Rs. 7,00,000 is eligible for a tax rebate under section 87A
Old Regime:
No tax is payable on income of up to Rs. 2.5 lakhs
Income of up to Rs. 5,00,000 is eligible for a tax rebate under section 87A
Old Regime: Tax rate on 10 lakhs is 30% p.a.
New Regime: Tax rate on 10 lakhs is 20% p.a.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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