📋 Income Tax (FY 24-25)

Understanding Income Tax (FY 2024-25)

Income tax is a direct tax that a government levies on the income of its citizens. In India, the tax structure is progressive, meaning the tax rate increases as the income increases. Recent budgets have introduced a "New Regime" alongside the "Old Regime," giving taxpayers a choice.

Old Regime vs. New Regime

The Old Regime allows for various deductions (like Section 80C, HRA, 80D) which can lower your taxable income significantly if you have investments. The New Regime offers lower tax rates but removes most exemptions and deductions.

Which one should you choose?

• Choose Old Regime if: You have significant investments (PPF, LIC, ELSS), pay rent (HRA), and have health insurance.
• Choose New Regime if: You prefer simplicity, do not have many tax-saving investments, or your income is in a bracket where the lower rates outweigh the deductions.

Standard Deduction

A flat standard deduction (currently ₹50,000, proposed to increase in newer budgets) is available to salaried employees under both regimes, reducing your taxable income directly.

FAQ

Is income up to ₹7 Lakhs tax-free?

Under the New Regime (FY 23-24 onwards), a rebate under Section 87A makes income up to ₹7 Lakhs effectively tax-free. However, if your income crosses this threshold, tax is calculated slab-wise.