New vs old Income Tax regime: People often ask how much tax will have to be paid on a salary of ₹ 1 crore to ₹ 10 crore under the New vs Old Income Tax Regime and how much money will be left in hand? It is important for every high-salary earner to know this. There is a huge difference in the deductions and in-hand salary in both the tax slabs. If you want to save tax on a high salary, then this comparison can be very beneficial for you. So let’s try to understand the complete calculation.
If the salary is in crores, then how much money do you take home?
Which is the best in comparison to the new and old income tax slab of India, this remains a question in itself. However, out of these two, a big difference is seen in the tax burden and net income (in-hand salary). It is believed that the new tax slab usually gives more in-hand salary. So let’s know how much difference is there between the new and old slab in different salary brackets.
Difference between new and old tax regime on salary 1 crore
Let us assume that if you are choosing the new tax slab, then the in-hand salary on a salary of ₹1 crore will be around ₹70,74,220. Whereas in the old tax slab, this salary will be reduced to around ₹67,99,660.
Difference between the two on salary of ₹5 crore
So let’s now talk about what can be included in the two on a salary of 5 crores. In the new income tax slab, the in-hand salary on a salary of ₹5 crores will be around ₹3,10,75,250. Whereas in the old tax system, this in-hand salary will be reduced to around ₹3,07,63,250.
How much tax will be levied on a salary of ₹10 crores?
As our income increases, the tax rate also increases in both the systems. So now let’s also know how much tax will be levied on salary. So let us tell you that the average tax rate on a salary of ₹ 1 crore in the new tax is 29.26%, while in the old tax slab it will be around 32%. At the same time, the tax rate on a salary of ₹ 10 crore in the new tax will be 38.42%, while in the old it will be around 42.46%.
Why is the in-hand salary higher in the new tax?
In every salary bracket, the in-hand salary is higher under the new tax slab. For example, on a salary of ₹1 crore, the in-hand income in the new tax slab will be 70.74% and in the old slab it will be around 67.99%. Whereas on a salary of ₹10 crore, this difference will be 61.58% in the new tax slab and 57.54% in the old tax slab.
Benefits of the old tax system
In the old income tax slab, you get the benefit of deductions and exemptions, which can reduce your tax liability. Under section 80C, you will get a deduction of up to ₹1.5 lakh (on investment in PPF, EPF, LIC etc.). You get standard deduction benefits of ₹50,000 and exemption on home loan and insurance premium. Along with this, you get HRA (House Rent Allowance) exemption and exemption on donation under section 80G.
Benefits of the new tax system
The new tax system is considered better than the old one. The new income tax slab provides simpler tax slabs, but there are no deductions or exemptions. However, if you want a simpler tax slab and more in-hand salary, then the new system can be beneficial. (Note: This photo gallery is based on general information)
