Introduction

When it comes to understanding the income tax on 24 lakh Rs, it's important to consider the current tax regime, slabs, and deductions available in India. This article will break down the calculations for both the old and new tax regimes, providing insights for individuals looking to minimize their tax liability. We will also discuss the Health and Education Cess that applies to the total tax amount.

The Old Tax Regime with Deductions

Under the old tax regime, the tax slabs and applicable rates are as follows:

Up to 2.5 lakh: Nil From 2.5 lakh to 5 lakh: 5% From 5 lakh to 10 lakh: 20% Above 10 lakh: 30%

Let's calculate the income tax on a total income of 24 lakh Rs under the old tax regime, assuming no exemptions or deductions are claimed:

Income up to 2.5 lakh:
tTax 0 Income from 2.5 lakh to 5 lakh:
tTax 5% of (500000 - 250000) 5% of 250000 12500 Income from 5 lakh to 10 lakh:
tTax 20% of (1000000 - 500000) 20% of 500000 100000 Income above 10 lakh:
tTax 30% of (2400000 - 1000000) 30% of 1400000 420000

Total Tax Old Regime:
Total Tax 12500 100000 420000 532500

The New Tax Regime without Deductions

With the new tax regime introduced in 2020, the tax rates are much lower and the tax slabs are updated. Under the new tax regime, the applicable rates are:

Up to 2.5 lakh: Nil From 2.5 lakh to 5 lakh: 5% From 5 lakh to 7.5 lakh: 10% From 7.5 lakh to 10 lakh: 15% From 10 lakh to 12.5 lakh: 20% From 12.5 lakh to 15 lakh: 25% Above 15 lakh: 30%

Again, let's calculate the income tax on a total income of 24 lakh Rs under the new tax regime, assuming no exemptions or deductions are claimed:

Income up to 2.5 lakh:
tTax 0 Income from 2.5 lakh to 5 lakh:
tTax 5% of 250000 12500 Income from 5 lakh to 7.5 lakh:
tTax 10% of 250000 25000 Income from 7.5 lakh to 10 lakh:
tTax 15% of 250000 37500 Income from 10 lakh to 12.5 lakh:
tTax 20% of 250000 50000 Income from 12.5 lakh to 15 lakh:
tTax 25% of 250000 62500 Income above 15 lakh:
tTax 30% of (2400000 - 1500000) 30% of 900000 270000

Total Tax New Regime:
Total Tax 12500 25000 37500 50000 62500 270000 457500

Choosing the Right Regime

For a salary ranging between 20 lakh and 25 lakh Rs, the applicable tax rate under the new regime is 30%, which is the same as the old regime's highest tax slab. Therefore, the tax liability for a 24 lakh Rs income under both regimes can be calculated as detailed above. However, choosing the right tax regime depends on individual circumstances, such as deductions and exemptions.

Health and Education Cess
On top of the main tax liability, a 4% cess known as the Health and Education Cess is applicable on the total tax amount. This means you need to pay an additional 4% of the total tax calculated.

Conclusion

Understanding the tax structure and choosing the right tax regime can significantly impact your tax liability. The new tax regime, with lower tax rates and updated slabs, can offer significant savings for individuals with incomes of 24 lakh Rs or more. Always consider consulting a tax professional for personalized advice to ensure compliance and minimize your tax burden.