Income tax: Calculation of tax is easy in the new income tax regime, know how much your tax will be

New rules related to the new income tax regime have come into effect from April 1. Finance Minister Nirmala Sitharaman had announced on February 1, 2025 that income up to Rs 12 lakh per annum will be tax-free in the new regime. She had said that employed people will not have to pay tax on income up to Rs 12.75 lakh per annum. This announcement made crores of taxpayers happy. Actually, the interest of individual taxpayers has increased in the new regime. The reason for this is that its structure is very simple. The Finance Minister had also changed its tax slab in the budget presented on February 1, which has become very beneficial for taxpayers.

Only two deductions are available in the new regime

If you use the new Income Tax regime, you can easily calculate the tax on your income. For this, you have to keep some things in mind. First, it is important to know that only two types of deductions are available in the new regime. First, standard deduction of Rs 75,000. Second, deduction on employer's contribution to NPS under section 80CCD (2) of the Income Tax Act. Under this section, the employer can contribute up to 14 percent of the basic salary (plus DA) to the employee's NPS account.

Taxable income after deductions from gross income

Suppose you are employed and your annual income is Rs 20 lakh. Let us also assume that your employer does not make any contribution to your NPS account. In such a situation, you will get the benefit of standard deduction of only Rs 75,000. In the old regime of income tax, only Rs 50,000 standard deduction is still available. To make the new regime attractive, the government has increased the standard deduction to Rs 75,000.

There will be no tax on the first 4 lakh rupees

Now it is important to know about the new tax slabs of the new regime. In this, tax is zero on income of Rs 4 lakh. 5% tax is levied on income of Rs 4 lakh to Rs 8 lakh. 10% tax is levied on income of Rs 8 lakh to 12 lakh, 15% tax is levied on income of Rs 12 lakh to 16 lakh, 20% tax is levied on income of Rs 16 lakh to 20 lakh, 25% tax is levied on income of Rs 20 lakh to 24 lakh and 30% tax is levied on income of more than Rs 24 lakh.

This is how you can calculate tax on your subsequent income

First of all, you have to deduct Rs 75,000 from your salary of Rs 20 lakh. After this, your taxable income will be Rs 19.25 lakh. Now, zero tax will be levied on the first Rs 4 lakh of your income. Rs 20,000 tax will be levied at the rate of 5 percent on the income of Rs 4 to 8 lakh. 10 percent tax will be levied on your income of Rs 8 to 12 lakh. Accordingly, your tax on this income of Rs 4 lakh will be Rs 40,000 at the rate of 10 percent. Then, the tax rate on the income of Rs 12 to 16 lakh is 15 percent. Accordingly, your tax on this Rs 4 lakh will be Rs 60,000. The tax on the income of Rs 16 to 20 lakh is 20 percent. Accordingly, your tax on the remaining income of Rs 3.25 lakh will be Rs 65,000 at the rate of 20 percent.

Also read: Income Tax old regime Vs New regime : Which is best for you among the new and old regime?

Cess will also have to be added to the total tax

In this way, your total tax will be Rs 1.85 lakh (20,000+40,000+60,000+65,000). You will also have to pay 4% cess on this tax. This will be Rs 7,400. After adding this, your total tax will be Rs 1,92,400. This is just an example. Based on this example, you can easily calculate the tax on your income. You just have to keep in mind the tax slab. If a taxpayer's salary is Rs 23 lakh, then he will also have to calculate tax on 20 to 24 lakh at the rate of 25% tax.