How Much Tax Will You Pay On Rs 15 Lakh Income In FY 2025-26? A Detailed Breakdown

With the start of the new financial year on April 1, India also introduced an updated income tax regime. The revised tax slabs are applicable for taxpayers filing their Income Tax Returns (ITR) for the FY 2025-26.

Let's take a look at the new income tax slab rates for FY 2025-26:

Income Tax Slabs for FY 2025-26 (Under the New Regime):

• Up to Rs 4 lakh - Nil (No tax)
• Rs 4 lakh to Rs 8 lakh - 5%
• Rs 8 lakh to Rs 12 lakh - 10%
• Rs 12 lakh to Rs 16 lakh - 15%
• Rs 16 lakh to Rs 20 lakh - 20%
• Rs 20 lakh to Rs 24 lakh - 25%
• Above Rs 24 lakh - 30%

Income Tax Slabs under the Old Tax Regime:
Under the old tax regime, the slabs were:
• Up to Rs 2.5 lakh - Nil (No tax)
• Rs 2.5 lakh to Rs 5 lakh - 5%
• Rs 5 lakh to Rs 10 lakh - 20%
• Above Rs 10 lakh - 30%

New Standard Deduction Benefit in the New Tax Regime

Under the new income tax regime, taxpayers can now avail of a standard deduction of up to Rs 75,000, which makes an annual income of up to Rs 12.75 lakh tax-free. This deduction brings a significant relief for many taxpayers, as it reduces the taxable income further.

Let's calculate the income tax for an individual earning Rs 15 lakh per annum under the new tax regime:

Step 1: Apply the Standard Deduction
First, the standard deduction of Rs 75,000 is applied:
Rs15,00,000 - Rs75,000 = Rs14,25,000
This reduces the taxable income to Rs 14,25,000.

Step 2: Tax Savings Opportunities
The new tax regime also provides several tax-saving opportunities. For instance, contributions made by the employer to the National Pension System (NPS), up to 14% of the employee's basic salary, are tax-free. This means that if your employer contributes to the NPS on your behalf, that amount will not be considered part of your taxable income, thus further reducing your overall tax burden.

Let's estimate the potential savings if half of your cost-to-company (CTC) is your basic salary and dearness allowance (DA). Here's how the calculation works:
• Basic Salary: Rs 7.5 lakh
• Maximum NPS Tax Benefit: 14% of Rs 7.5 lakh = Rs 1,05,000 tax benefit

Additional Tax Benefits from Reimbursements:
There are also various tax benefits available through reimbursements. For example, on a Rs 15 lakh salary, the following reimbursements are typically tax-free:
• Uniform Allowance: Rs 34,950
• Entertainment Allowance: Rs 34,950
• Books & Periodicals: Rs 39,900
• Travel Allowance: Rs 1,20,000
The total reimbursement amount comes to Rs 2,29,800.

Step 3: Total Tax Savings
Now, let's calculate your total tax savings:
Total Tax Savings= Rs2,29,800 + Rs1,05,000 = Rs3,34,800
This total amount is deducted from your Rs 15 lakh income, reducing your taxable income to:
Rs15,00,000 - Rs3,34,800= Rs11,65,200

This breakdown highlights the potential tax-saving opportunities under the new tax regime and how careful planning can lead to a reduction in your tax burden.