Income Tax Calculator AY 2024-25: How Much Deductions Should Make You Choose The Old Tax Regime?

Break Even Point In Deductions To Opt For Old Tax Regime?If your deductions fall below a specific threshold, the new tax regime is better, while higher deductions above the threshold favour the old tax regime. A list of break-even points for deductions at different income levels, where the tax liability is equal under both regimes aids comparison. Income up to Rs 7.27 lakh is exempt from tax under the new tax regime, so let’s check for breakeven points for taxpayers with an annual income of Rs 8 lakh.According to Taxmann, an online income tax advisory firm, an income of Rs. 8 lakh, will require a break-even deduction sum of Rs. 1,87,500 to make tax liability equal under both tax regimes at Rs. 36,400. Simply put, the new tax regime becomes beneficial for taxpayers if his or her deduction is less than Rs. 1,87,500. Any amount of deduction above Rs 1,87,500 favours taxpayers to choose the old tax regime.Further, if your income is Rs 9 lakh, the break-even point for deductions is Rs. 2,37,500, where tax liability will fall equal to Rs. 46,800 under both regimes. Taxpayers will only benefit from the old regime if their deductions are above Rs. 2,37,500. Similarly, for taxpayers earning an annual income of Rs. 10 lakh, the deductions required to opt for the old tax regime are 2,62,500. If one earns Rs. 12.5 lakh annual income, once he or she has deductions up to Rs 3,12,500, the tax liability (Rs. 1,04,000) is the same under both regimes. Above that deduction level old tax regime must be chosen. For an annual income earner of Rs. 15 lakh, the new tax regime is beneficial as long as eligible deductions stay below Rs. 3.75 lakh.

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