To get a ₹25,000 rebate in the new tax regime (FY 2024-25), ensure your net taxable income does not exceed ₹7 lakh. This rebate, under Section 87A, is automatically applied by the tax portal for resident individuals. It acts as a tax credit to eliminate tax liability for earners in this bracket.
Rebate Limits for Each Year:
FY 2023-24 (AY 2024-25) onwards: As per the new tax regime, the rebate limit was changed to ₹25,000 for those with taxable income up to ₹7 lakh. Meanwhile, the old tax regime remained the same at ₹12,500 for those with an income of up to ₹5 lakh.
Rebate is a tax reduction available to resident individuals when they earn income within 10% tax slab. Under the new regime, a rebate of Rs.60,000 is allowed for an income up to Rs. 12 lakhs. Under the old regime, a rebate of Rs. 12,500 is allowed for an income up to Rs. 5 lakhs.
Rebate Limit for FY 2024-25 & AY 2025-26. For FY 2024-25 (AY 2025-26), the rebate limit will remain Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief.
An individual who is resident in India and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A. Rebate under section 87A is available in the form of deduction from the tax liability. Rebate under section 87A will be lower of 100% of income-tax liability or Rs.
Form 10-IEA is a declaration made by the return filers for choosing the 'Opting Out of New Tax Regime'. An Individual, HUF, AOP (not being co-operative societies), BOI or Artificial Juridical Person with business or professional income must submit Form 10-IEA if they wish to pay income tax as per the old tax regime.
Section 24 of the Income Tax Act allows deductions on home loan interest, reducing tax liability. However, the new tax regime removes this benefit, impacting homeowners. Taxpayers must compare both regimes to make informed financial decisions.
Note that the new tax regime has removed nearly 70 tax deductions that were earlier allowed in the old regime. For example, you can not claim tax-saving benefits on expenses related to medical insurance premiums under Section 80D and deductions up to ₹1.5 Lakh under Section 80C in new tax regime.
How to Save Tax in India? 10 Smart and Legal Ways for FY 2025-26
The new tax regime allows salaried people and senior citizens earning pensions a standard deduction of ₹75,000. Family Pension: If you have a family pension income, the new regime offers a deduction for it. You can claim a deduction of ₹25,000 or one-third of the pension amount, whichever is lower.
The nice thing about tax refunds in Canada is that there is no maximum amount you can receive. Tax refunds are individual and are based on how much you've paid in total in taxes and how much you actually owe. When you file your annual tax return in 2024, there are tax credits and deductions you can claim.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
It's better to itemize if your total eligible expenses (mortgage interest, state/local taxes up to a limit, charitable donations, medical costs) exceed the Standard Deduction amount for your filing status; otherwise, taking the Standard Deduction is simpler and saves more money. You must choose one method, and the goal is always to reduce your taxable income the most, so compare the totals and pick the larger figure.
Tax rebates are different from tax refunds, as they are issued at any time during the year and are not related to deductions and credits claimed on a return. Some governments provide incentives in the form of rebates for the purchase of hybrid cars that reduce gasoline consumption.
Common Mistakes to Watch Out For
Is Section 80TTA applicable to the new tax regime? No, deductions under section 80TTA do not apply to the new tax regime.
Some of the most common federal tax deductions include:
New Tax Regime Exemption List
Yes, individuals can claim deductions under both Section 24 and Section 80EE of the Income Tax Act, provided they meet the respective criteria. Section 24 allows deductions on interest payments, while Section 80EE offers additional deductions specifically for first-time homebuyers meeting certain conditions.
0.3: Explain the new tax regime? Ans: This tax regime was introduced in budget 2020, offers lower tax rate but without the ability to claim deductions and exemptions except for NPS & EPF contribution. Standard Deduction of INR 75,000 for salaried individuals and pensioners (from FY 2024-25).
Use caution when claiming on tax without receipts
If you don't have much in the way of deductible claims to make on your tax, you should not automatically claim an amount up to the $300 limit just because you can. The same applies for the $150 limit for laundry and the small expenses limit of $200.
Here are some common examples of tax-free and tax-efficient investments: