Understanding income tax calculation can be tricky, especially with the evolving tax structures in India. Whether you’re a salaried professional or a business owner, knowing how much tax you owe on an annual income of INR 14 lakhs is crucial for financial planning. This article will break down the tax calculation in an easy-to-understand manner, covering both the new tax regime and the old tax regime, so you can make an informed decision.
How Much Tax Will Be Levied on an Income of 14 Lakhs?
| Key Points | Details |
|---|---|
| Annual Income | ₹14,00,000 |
| Tax Regimes Available | Old & New Tax Regime |
| Standard Deduction | ₹50,000 (New Regime) |
| Tax Under New Regime | ₹1,45,000 (before cess) |
| Tax Under Old Regime | Varies based on deductions |
| Cess (4%) | ₹5,800 |
| Total Tax Payable (New Regime) | ₹1,50,800 |
Choosing the right tax regime depends on your financial situation. The new tax regime is simpler with lower rates, but the old regime offers deductions that can reduce taxable income. Understanding the detailed tax calculation helps make informed decisions, ensuring you optimize tax savings while complying with Indian tax laws.
Understanding the Indian Income Tax System
Before diving into tax calculations, it’s important to understand India’s income tax structure. The government provides taxpayers with two options:
- New Tax Regime (Introduced in FY 2020-21) – Lower tax rates but fewer exemptions and deductions.
- Old Tax Regime – Higher tax rates but allows deductions like Section 80C, 80D, HRA, and more.
The Income Tax Department revises tax slabs periodically to ensure fairness. Your tax liability depends on which regime you choose.
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Tax Calculation for ₹14 Lakhs Under the New Regime
The new tax regime is straightforward, as it has fewer deductions but lower tax rates. Here’s a breakdown:
New Tax Regime Slabs (FY 2023-24)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3,00,000 | 0% |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Step-by-Step Calculation
- First ₹3,00,000 = No tax
- Next ₹3,00,000 (₹3,00,001 – ₹6,00,000) @ 5% = ₹15,000
- Next ₹3,00,000 (₹6,00,001 – ₹9,00,000) @ 10% = ₹30,000
- Next ₹3,00,000 (₹9,00,001 – ₹12,00,000) @ 15% = ₹45,000
- Next ₹2,00,000 (₹12,00,001 – ₹14,00,000) @ 20% = ₹40,000
Total Tax Before Cess = ₹1,45,000
Cess (4% on tax) = ₹5,800
Total Tax Payable = ₹1,50,800
Tax Calculation for ₹14 Lakhs Under the Old Regime
The old tax regime allows deductions, which reduce taxable income. The tax slabs are:
Old Tax Regime Slabs (FY 2023-24)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Possible Deductions Under Old Regime
- Standard Deduction: ₹50,000
- 80C (Investments in PPF, ELSS, LIC, etc.): ₹1,50,000
- 80D (Health Insurance): ₹25,000
- HRA (If applicable): ₹1,00,000 (varies based on rent paid)
Assuming the taxpayer claims ₹2,25,000 in deductions, the taxable income becomes ₹11,75,000.
Step-by-Step Tax Calculation (Old Regime)
- First ₹2,50,000 = No tax
- Next ₹2,50,000 (₹2,50,001 – ₹5,00,000) @ 5% = ₹12,500
- Next ₹5,00,000 (₹5,00,001 – ₹10,00,000) @ 20% = ₹1,00,000
- Remaining ₹1,75,000 (₹10,00,001 – ₹11,75,000) @ 30% = ₹52,500
Total Tax Before Cess = ₹1,65,000
Cess (4%) = ₹6,600
Total Tax Payable (Old Regime) = ₹1,71,600
Which Tax Regime Should You Choose?
- If you have high deductions (₹2,50,000 or more) → Old Regime is better.
- If you don’t have significant deductions → New Regime is simpler and tax-efficient.
- The new regime works well for young professionals with fewer investments.
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Tax Will Be Levied on an Income of 14 Lakhs FAQs
1. Can I switch between the old and new tax regimes every year?
Yes, salaried individuals can choose a regime every year, but businesses must stick with their choice.
2. Is HRA exemption available under the new tax regime?
No, the new tax regime does not allow HRA exemption.
3. What is the basic exemption limit?
- Old Regime: ₹2,50,000
- New Regime: ₹3,00,000
4. Can I claim 80C deductions under the new tax regime?
No, the new tax regime does not allow deductions under Section 80C.5. Which regime is best for self-employed individuals?
It depends on deductions. If deductions exceed ₹2,50,000, the old regime is better.
