Income Tax Calculator AY 2024-25
Calculate your Income Tax for AY 2024-25 with our free online tool. Get accurate results, maximize tax savings, and plan your finances effortlessly. Avoid pe...
functions Mathematical Formula
Formula for Income Tax Calculation (New Regime, Simplified)
1. Adjusted Gross Income (AGI):
AGI = Gross Annual Income - HRA Exemption
2. Total Chapter VI-A Deductions:
Total VI-A Deductions = Min(80C Deductions, ₹1,50,000) + Min(80D Deductions, ₹1,00,000) + Other Chapter VI-A Deductions
3. Net Taxable Income (NTI):
NTI = AGI - Standard Deduction - Total Chapter VI-A Deductions
(NTI cannot be less than 0)
4. Tax Liability (as per New Regime Slabs for AY 2024-25):
Up to ₹3,00,000: Nil₹3,00,001 to ₹6,00,000: 5% on income exceeding ₹3,00,000₹6,00,001 to ₹9,00,000: ₹15,000 + 10% on income exceeding ₹6,00,000₹9,00,001 to ₹12,00,000: ₹45,000 + 15% on income exceeding ₹9,00,000₹12,00,001 to ₹15,00,000: ₹90,000 + 20% on income exceeding ₹12,00,000Above ₹15,00,000: ₹1,50,000 + 30% on income exceeding ₹15,00,000
5. Rebate under Section 87A:
If NTI ≤ ₹7,00,000, Rebate = Min(Tax Liability, ₹25,000)
6. Tax Before Cess:
Tax Before Cess = Tax Liability - Rebate under Section 87A
(Tax Before Cess cannot be less than 0)
7. Health & Education Cess:
Cess = 4% of Tax Before Cess
8. Total Tax Payable:
Total Tax Payable = Tax Before Cess + Health & Education Cess
Understanding AY 2024-25
Assessment Year (AY) 2024-25 refers to the period for which income is assessed, which corresponds to the Financial Year (FY) 2023-24 (April 1, 2023, to March 31, 2024). This is the period when the income was earned. Your income tax return for FY 2023-24 will be filed in AY 2024-25.
It's crucial to understand which assessment year applies to your earnings to ensure you use the correct tax laws, slabs, and deduction limits.
New Tax Regime vs. Old Tax Regime
For AY 2024-25, taxpayers have the option to choose between the New Tax Regime and the Old Tax Regime. The New Regime is now the default option. Key differences:
- New Regime: Offers lower tax rates but allows very few exemptions and deductions (e.g., no HRA, LTA, 80C, 80D, etc., except for a standard deduction for salaried individuals and some specific exemptions).
- Old Regime: Higher tax rates but provides a wide array of exemptions and deductions (HRA, LTA, 80C, 80D, 80G, etc.).
This calculator primarily uses the simplified New Tax Regime for calculation.
Key Deductions and Exemptions
Maximizing your deductions and exemptions can significantly reduce your tax liability. Here are some common ones:
- Standard Deduction: ₹50,000 for salaried individuals (applicable in both regimes for AY 2024-25).
- HRA Exemption: House Rent Allowance exemption (only available in the Old Regime).
- Section 80C: Investments in EPF, PPF, LIC, ELSS, home loan principal, etc., up to ₹1.5 Lakhs (only Old Regime).
- Section 80D: Health insurance premiums for self, family, and parents (only Old Regime).
- Other Chapter VI-A Deductions: Include 80CCD (NPS), 80E (education loan interest), 80G (donations), etc. (mostly Old Regime, some exceptions in New).
Rebate under Section 87A
Section 87A provides a tax rebate for individuals with a total taxable income up to a certain limit. For AY 2024-25:
- Old Regime: Full tax rebate up to ₹12,500 if taxable income does not exceed ₹5 Lakhs.
- New Regime: Full tax rebate up to ₹25,000 if taxable income does not exceed ₹7 Lakhs.
This rebate effectively makes your tax liability zero if your taxable income falls within these limits and your tax calculated is less than or equal to the rebate amount.
Frequently Asked Questions
What is the Assessment Year (AY) 2024-25?
AY 2024-25 refers to the year in which the income earned during the Financial Year (FY) 2023-24 (April 1, 2023, to March 31, 2024) is assessed to tax. Essentially, it's the period when you file your tax return for the income earned in the preceding financial year.
Is the New Tax Regime mandatory for AY 2024-25?
No, it's not strictly mandatory, but it has become the default option. Taxpayers can still choose the Old Tax Regime if they prefer. However, the choice must be made at the time of filing your Income Tax Return. Salaried individuals can switch between regimes each year, while those with business income have restrictions.
What is the 4% Health and Education Cess?
The Health and Education Cess is an additional levy imposed by the government at a rate of 4% on the income tax payable (after all rebates and surcharges, if any). The funds collected from this cess are specifically used for health and education initiatives across the country.
Can I claim HRA exemption under the New Tax Regime?
Generally, no. The New Tax Regime offers very few exemptions and deductions, and HRA (House Rent Allowance) exemption is not one of them. To claim HRA exemption, you would typically need to opt for the Old Tax Regime. This calculator simplifies the HRA input by only affecting calculations if you were to consider an Old Regime scenario or for understanding potential savings if you switch.
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