Income tax Calculation above 5 Lakh for FY 2024-25 as Per New and Old Tax Regime

When you earn income above a specified limit, you are obligated by the government to pay certain taxes to the latter. This tax money is essentially used to provide for several welfare projects and services designed for your convenience. Here we understand a little more about what is income tax, what is the Income tax above 5 Lakh and the standard deduction on salary in this case.

What is Income Tax?

As the name inevitably suggests, income tax refers to the specific tax that is computed on your total taxable income according to the specific tax slab that it falls under. When you add your income earned from various sources, such as rent, annual salary, capital gains, and the like, you derive your gross total income. From this, you can then remove the standard deduction on salary as well as certain other tax deductions that you may be eligible for as per law. You can then derive your taxable income.

If the above method sounds confusing or complicated, you can go for an easier and more convenient alternative – using the income tax calculator. Let’s take a look at what that is.

What is an Income Tax Calculator?

It is a simple, fast and convenient-to-use online tool that helps you calculate the total amount of tax that you need to pay in seconds! The tax payable is calculated on the basis of your taxable income, age, expenses incurred, investments made, and the interest payable on home loan, according to the relevant law of taxation.

Below is a small example of how to use the income tax calculator for computing your tax liability for the FY 2024-25:

• Step 1: Choose your age from the age range given
• Step 2: Enter your income earned per annum
• Step 3: Enter all your investments made as well as the various deductions you are eligible for under different sections of the Income Tax Act, such as –
  • Section 24B (Interest payable on repayment of home loan)
  • Section 80G (donations made as charity)
  • Section 80C (investments made in PPF, ELSS funds, and the like)
  • Section 80E (Interest payable on repayment of educational loan)
  • Section 80CCD(1B) [earnings under the National Pension System)
• Step 4: Enter the various tax exemptions that you are eligible for under HRA, LTA, and the like
  • In case of some fields that are not particularly applicable to your case, you may enter ‘0’. At the end of completing all the steps above, you will derive your total payable tax under the Old and New Tax Regimes for the FY 2024-25 (AY 2023-24).

Income Tax Slabs for FY 2024-25 (New Tax Regime)

Income Range (₹)	Tax Rate
0 – 2,50,000	Nil
2,50,001 – 5,00,000	5%
5,00,001 – 7,50,000	10%
7,50,001 – 10,00,000	15%
10,00,001 – 12,50,000	20%
12,50,001 – 15,00,000	25%
Above 15,00,000	30%

Note: 4% health & education cess is applicable on total tax.

Tax Calculation for ₹5.5 LPA Salary (FY 2024-25)

1. Under New Tax Regime (No Deductions Allowed)

• Taxable Income: ₹5,50,000

• Up to ₹2,50,000: Nil

• ₹2,50,001 – ₹5,00,000: 5% = ₹12,500

• ₹5,00,001 – ₹5,50,000: 10% of ₹50,000 = ₹5,000

• Total Tax Before Cess: ₹17,500

• 4% Cess: ₹700

• Total Tax Payable: ₹18,200

However, since taxable income is under ₹7L, Rebate under Section 87A makes tax = 0 under New Regime.

2. Under Old Tax Regime (Assuming ₹1.5L deduction under 80C)

• Gross Income: ₹5,50,000

• Less 80C Deduction: ₹1,50,000

• Taxable Income: ₹4,00,000

Tax Calculation:

• ₹2.5L – ₹5L slab → 5% on ₹1.5L = ₹7,500

• Total Tax Before Cess: ₹7,500

• Cess @ 4%: ₹300

• Total Tax Payable: ₹7,800

Tax Calculation for ₹6 LPA Salary

New Tax Regime

• ₹2.5L – ₹5L: ₹12,500

• ₹5L – ₹6L: 10% on ₹1L = ₹10,000

• Total = ₹22,500

• Cess @ 4% = ₹900

• Total Payable = ₹23,400

No rebate under 87A since income > ₹7L (after April 2023 rebate rule update)

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Old Tax Regime (With ₹1.5L 80C Deduction)

• Gross: ₹6,00,000

• Taxable after 80C: ₹4,50,000

• Tax: 5% of ₹2L = ₹10,000

• Cess @ 4% = ₹400

• Total Tax = ₹10,400

Old vs New Regime – Which is Better?

Income	Old Regime (with 80C)	New Regime
₹5.5L	₹7,800	₹0 (after 87A)
₹6L	₹10,400	₹23,400

For income up to ₹7L, New Regime is better due to full rebate
Above ₹7L, Old Regime may be better if you claim deductions

Income Tax Exemptions for Salaried Employees 2024-25

Under the New Tax Regime, the tax rates calculated for all the categories of individuals, such as salaried individuals below 60 years old, senior citizens over 60, as well as super senior citizens above 80, is the same. This means that the basic benefit of the exemption limit for senior and super-senior citizens in the country hasn’t increased much.

That said, there is some standard deduction on salary considered for professional tax exemption for the FY 2024-25:

• Conveyance allowance incurred on travel to work
• Transport allowance for specially-abled people is deducted
• Deductions for new employees under Section 80JJAA
• Investment made in the Notified Pension Scheme (NPS) deducted under Section 80CCD (2)
• Under Section 32, depreciation of assets, such as machinery, not including the extra depreciation expenses incurred by the employee traveling for work reasons or being transferred, is considered for deduction