15 Lakhs Salary and Income tax Filling. Old Regime is Still Saving More Than New Tax Regime.

The time to file income tax returns has arrived, and if you work for a private company, chances are you’ve received an email asking for investment proof submissions. At this point, many salaried employees find themselves stuck in a dilemma: Should they opt for the Old Tax Regime or the New Tax Regime? The central government says over 67% of taxpayers have already adopted the New Tax Slab, thanks to several revisions that make it more appealing. But is it always the best choice?

In this article, we’ll break down the tax liability for someone earning 15 lakhs per year. We’ll calculate the tax under both regimes and see which one is more beneficial under different scenarios.

Why the Confusion Between Old and New Tax Regimes?

1. Old Tax Regime: Offers multiple deductions (like 80C, 80D, 80CCD, etc.) and exemptions (like HRA, LTA). You can save a good amount of tax if you are ready to invest in specific instruments (PPF, NSC, ELSS, etc.) or claim allowances (house rent allowance, education allowance, etc.).
2. New Tax Regime: Has lower income tax slab rates but minimal deductions and exemptions. Under this system, you don’t have to invest in specific schemes to reduce your taxable income, which can be convenient for individuals who don’t want complex planning.

Example Calculation for 15 Lakh Annual Income

Let’s walk through a scenario to understand which option might be better for you:

1. Old Tax Regime Calculation (With Investments & Deductions)

Assume annual income = 15,00,000.

(A) Standard Deduction of ₹50,000

• Old Tax Regime lets you subtract ₹50,000 first.
  $15,00,000–50,000=14,50,000$

(B) Section 80C Deduction of ₹1,50,000

• By investing in EPF, PPF, NSC, ELSS, or paying children’s tuition fee, you can claim ₹1.5 lakh deduction.
  $14,50,000–1,50,000=13,00,000$

(C) Additional NPS Deduction (80CCD(1B)) of ₹50,000

• Investing in the National Pension System (NPS) can help you claim an extra ₹50,000 deduction.
  $13,00,000–50,000=12,50,000$

(D) Home Loan Interest Deduction (Section 24B) of ₹2,00,000

• If you have a home loan, you can claim up to ₹2 lakh on the interest component.
  $12,50,000–2,00,000=10,50,000$

(E) Health Insurance Deduction (Section 80D)

• You can claim up to ₹25,000 for your own/family’s health insurance and an additional ₹25,000 if you buy health insurance for your senior citizen parents.
• Let’s assume you claim ₹25,000 for yourself and family, and another ₹25,000 for senior citizen parents (making it total ₹50,000).
  $10,50,000–50,000=10,00,000$

Final taxable income under Old Regime = ₹10,00,000

Using standard income tax rates for the Old Regime, your final tax liability (including cess) would be roughly:

$$1,17,000\text{ (approx.)}$$

2. New Tax Regime Calculation (Minimal Deductions)

Under the New Tax Regime for 15,00,000 income:

1. Standard Deduction of ₹75,000
   • The latest provision allows a standard deduction of ₹50,000 + an additional ₹25,000 for salaried employees (total ₹75,000).
   • So: $15,00,000–75,000=14,25,000$
2. No Other Major Deductions
   • In the New Regime, you cannot claim 80C, 80D, or home loan interest deductions the same way as in the Old Regime.

Hence, your taxable income = ₹14,25,000

Your tax liability under the New Regime (including cess) on ₹14,25,000 would be around:

$$1,30,000\text{ (approx.)}$$

Which Regime is Better for a 15 Lakh Income?

1. If you invest and claim deductions worth around ₹4.5 lakh
   • Your taxable income can come down to around ₹10 lakh under the Old Regime, leading to a tax liability of about ₹1.17 lakh.
   • Compared to ₹1.30 lakh under the New Regime, the Old Regime saves you money if you can maximize deductions.
2. If you do not invest or claim many deductions
   • The Old Regime tax on ₹15 lakh (with only the standard ₹50k deduction) can go up to around ₹2.57 lakh (approx.).
   • Under the New Regime, tax is around ₹1.30 lakh, which is clearly lower.
   • In this case, New Regime is better.

Quick Comparison

Final Takeaway

• Old Tax Regime is more beneficial if you’re ready to invest in eligible tax-saving instruments and other deductions.
• New Tax Regime suits those who prefer not to invest or do not have enough expenses that qualify for deductions.

Always evaluate your expected expenses, investment goals, and existing financial commitments before choosing a regime. If you’re still unsure, consult a tax advisor to help you make an informed decision.