Income Tax Calculation for Taxable Income Over Rs 12 Lakh

New Income Tax Slabs for FY 2025-26

Starting April 1, 2025, individuals choosing the new income tax regime for FY 2025-26 will have no tax liability on taxable income up to Rs 12 lakh. However, your net taxable income may exceed Rs 12 lakh after considering deductions like the standard deduction of Rs 75,000 and 14% employer’s contribution to the National Pension System (NPS).

Here’s an example of how your income tax will be calculated in the new income tax regime for the new financial year:

• Income (In Rs)
• Tax rate (In %)

• 0-4,00,000
• 0

• 4,00,001-8,00,000
• 5

• 8,00,001-12,00,000
• 10

• 12,00,001-16,00,000
• 15

• 16,00,001-20,00,000
• 20

• 20,00,001-24,00,000
• 25

• 24,00,001 and above
• 30

New Tax Regime: Income Tax Calculation for Taxable Income Above Rs 12 Lakh

Consider a scenario where your total taxable income is Rs 21 lakh, including salary earnings, bank savings interest, and equity share dividends. Note that capital gains are excluded as they have separate tax rates.

• You can claim Rs 75,000 as standard deduction and Rs 1.5 lakh towards employer’s NPS contribution.
• First, determine the net taxable income. The income tax assessment will be based on the net taxable sum of Rs 18.75 lakh. The tax calculation process involves computing tax liability for individual tax brackets.

• Gross taxable income
• 21,00,000

• Less: Standard deduction
• 75,000

• Less: Employer’s contribution to NPS account
• 1,50,000

• Net taxable income
• 18,75,000

• For the initial tax bracket of 0 to Rs 4,00,000, the applicable rate is 0%. When computing tax on Rs 18.75 lakh, the first Rs 4 lakh attracts no tax.
• The remaining sum of Rs 14.75 lakh will be taxed according to subsequent tax brackets.
• For earnings between Rs 4,00,001 and Rs 8,00,000, a 5% tax rate applies. When calculating tax on Rs 14.75 lakh, first subtract Rs 4 lakh. The tax on this Rs 4 lakh portion amounts to Rs 20,000 (calculated at 5%). Therefore, from the Rs 14.75 lakh income, Rs 20,000 is payable as tax on the first Rs 4 lakh segment.
• The remaining amount of Rs 10.75 lakh requires further tax calculations using additional slabs. For the range between Rs 8,00,001 and Rs 12,00,000, a 10% tax rate is applicable. From the Rs 10.75 lakh, deduct Rs 4 lakh. The tax calculation on this Rs 4 lakh at 10% equals Rs 40,000. Thus, for this Rs 4 lakh portion of the Rs 10.75 lakh, the tax liability is Rs 40,000.
• The remaining sum of Rs 6.75 lakh will be taxed according to subsequent tax slabs. For the fourth tax bracket ranging from Rs 12,00,001 to Rs 16,00,000, a 15% tax rate applies. From the total amount of Rs 6.75 lakh, Rs 4 lakh is subject to taxation. The tax calculation at 15% on Rs 4 lakh amounts to Rs 60,000. Therefore, on Rs 4 lakh of the Rs 6.75 lakh income, the tax liability is Rs 60,000.
• The remaining sum of Rs 2.75 lakh will be taxed according to other applicable slabs. The fifth tax bracket spans from Rs 16,00,001 to Rs 20,00,000, with a 20% tax rate. The remaining income of Rs 2.75 lakh is taxed under this bracket, resulting in a tax payment of Rs 55,000.

• Income (In Rs)
• Tax rate (In %)
• Taxed income (Rs)
• Tax amount (Rs)
• Balance (Rs)

• 0-4,00,000
• 0%
• 400000
• 0
• 1475000

• 4,00,001-8,00,000
• 5%
• 400000
• 20000
• 1075000

• 8,00,001-12,00,000
• 10%
• 400000
• 40000
• 675000

• 12,00,001-16,00,000
• 15%
• 400000
• 60000
• 275000

• 16,00,001-20,00,000
• 20%
• 400000
• 80000