Real Income Tax Guide: Old vs New, TDS & Savings

New regime (default): 0% to ₹4L, 5% ₹4–8L, 10% ₹8–12L, 15% ₹12–16L, 20% ₹16–20L, 25% ₹20–24L, 30% above ₹24L. Salaried standard deduction ₹75,000. Section 87A rebate wipes tax to zero when taxable income is ₹12L or less — so salary up to ₹12.75L pays zero tax.

Old regime (opt-in): 0% to ₹2.5L (₹3L for 60–80 yrs, ₹5L for 80+), 5% to ₹5L, 20% to ₹10L, 30% above. Standard deduction ₹50,000, full 80C/80D/home-loan/HRA deductions allowed. Few deductions → new regime usually wins; big deductions (home loan + maxed 80C + HRA) → old can win at higher incomes. Salaried people can switch every year.

The 'no tax to ₹12L' rebate applies ONLY to slab-rate income — never to capital gains, lottery or other special-rate income. Example: ₹11L salary + ₹2L equity LTCG is NOT tax-free; the LTCG is still taxed at 12.5% flat.

Marginal relief protects income just above ₹12L: at ₹12.10L you pay roughly ₹10,000 (not the full ₹61,500 slab tax), so a small raise never leaves you poorer. Relief phases out around ₹12.75L. Resident individuals only — no 87A rebate for NRIs or HUFs.

Salary: your employer estimates yearly tax from your declarations and deducts monthly. Miss the Jan–Feb investment-proof deadline and the last 2–3 months' salary takes a big TDS hit — the commonest 'salary shock'. Form 16 after March is your filing base.

FD/RD interest: 10% TDS per bank once interest crosses ₹50,000/year (₹1,00,000 for seniors, Sec 194A, Budget 2025). File 15G (below 60) / 15H (seniors) each April if income is below the taxable limit. Business/freelance income: no employer TDS safety net — pay advance tax yourself in instalments if yearly liability exceeds ₹10,000, or face 234B/234C interest.

Listed equity (STT paid): STCG up to 12 months at 20% flat, no exemption. LTCG above 12 months at 12.5% flat on gains above ₹1.25L per year. Harvesting gains up to ₹1.25L yearly and reinvesting is a legal, commonly used plan.

Debt mutual funds bought on/after 1 Apr 2023 are always taxed at slab rate — there is no 12.5% LTCG bucket for them. Other assets (gold, unlisted shares): generally 12.5% without indexation. Property bought before 23 Jul 2024 may let a resident choose 20%-with-indexation vs 12.5%-without — verify with a tax professional before a sale. Breaking an FD is NEVER a capital gain: FD interest is always 'other sources' income at slab rate.

80C caps at ₹1.5L combined (PPF + ELSS + insurance + home-loan principal + tuition — one shared cap, not per item). Section 24(b): home-loan interest up to ₹2L/year for self-occupied. 80D: health-insurance premium (higher limits for senior-citizen parents). 80CCD(1B): extra ₹50,000 NPS over 80C.

HRA exemption (old regime only) = least of: actual HRA received, rent minus 10% of salary, 50% of salary (metro) or 40% (non-metro). None of these — except standard deduction and employer NPS under 80CCD(2) — work in the new regime. That single fact decides most regime choices.

Salaried: tax auto-deducted via TDS, ITR-1/ITR-2, no books needed. Business/professional: no auto-TDS — quarterly advance tax (15 Jun, 15 Sep, 15 Dec, 15 Mar) if liability crosses ₹10,000; books required above turnover limits; ITR-3 regular or ITR-4 presumptive.

Presumptive scheme: 44AD small business declares ~6–8% of turnover as profit, 44ADA professionals declare 50% of receipts — no books, no audit below limits (re-verify turnover caps each Budget). Freelancers switching from salary: this is the biggest practical change — nobody withholds your tax any more.