Income Tax Regimes for Salaried Professionals
In India, salaried employees can choose between the Old Tax Regime (which offers deductions like HRA, LTA, and Section 80C) and the New Tax Regime (which offers lower slab rates but fewer exemptions).
Tax Regime Key Parameters:
- Standard Deduction: A flat deduction of ₹75,000 under the New Regime and ₹50,000 under the Old Regime is automatically applied to salary earners.
- Section 80C: Deductions up to ₹1,500,000 for PF, PPF, ELSS, and insurance premiums are only eligible under the Old Regime.
- Tax Rebate: Salaries up to ₹12 Lakhs (New Regime, revised) or ₹5 Lakhs (Old Regime) pay zero net tax due to tax rebates. Marginal relief applies just above the limit: between ₹12 lakh and roughly ₹12.7 lakh of taxable income, tax is capped at the amount by which your income exceeds ₹12 lakh.