Decoding the 2025 Finance Bill: Tax Implications for Your Income – A ₹15 Lakh Example
The Finance Bill 2025 brings significant changes to the Indian tax landscape, particularly with the introduction of the new tax regime. Understanding these changes is crucial for accurate tax planning. Let's break down the tax implications for a resident individual with a total income of ₹15 lakh for FY26, considering the new regime.
Scenario: A resident individual earns ₹12 lakh from rent and interest income, and ₹3 lakh from long-term capital gains (LTCG) on equity Mutual Funds (MFs). We'll explore how the new tax regime impacts their tax liability.
Understanding the New Tax Regime: The new tax regime offers lower tax rates compared to the old regime, but with fewer deductions and exemptions. It's essential to evaluate whether the benefits of lower rates outweigh the loss of potential deductions.
Tax Calculation Under the New Tax Regime (FY26):
- Total Income: ₹15 lakh
- LTCG on Equity MF: ₹3 lakh (Taxable at 10% + applicable surcharge and cess)
- Rent/Interest Income: ₹12 lakh
Let's calculate the tax liability step-by-step:
- LTCG Tax: On LTCG exceeding ₹1 lakh, a tax of 10% applies. Therefore, the tax on ₹2 lakh (₹3 lakh - ₹1 lakh) will be ₹20,000 (10% of ₹2 lakh). Add surcharge and cess as applicable (typically around 4% of the tax amount). Let's estimate the surcharge and cess at ₹800. Total LTCG Tax: ₹20,800
- Income Tax Calculation:
- Up to ₹3 lakh: Nil
- ₹3 lakh to ₹6 lakh: 5% of ₹3 lakh = ₹15,000
- ₹6 lakh to ₹9 lakh: 10% of ₹3 lakh = ₹30,000
- ₹9 lakh to ₹12 lakh: 15% of ₹3 lakh = ₹45,000
- ₹12 lakh to ₹15 lakh: 20% of ₹3 lakh = ₹60,000
- Total Tax Liability: ₹20,800 (LTCG Tax) + ₹150,000 (Income Tax) = ₹170,800
Important Considerations:
- Surcharge and Cess: The surcharge rates and cess will depend on the total income. The calculations above use estimated figures.
- Deductions: Under the new tax regime, very few deductions are allowed. This is a crucial factor to consider when deciding between the old and new regimes.
- Comparison with Old Regime: It's highly recommended to calculate your tax liability under both the old and new regimes to determine the most beneficial option.
- Finance Bill Updates: This analysis is based on the Finance Bill 2025 as of the current date. Changes may occur before the bill is finalized. Always refer to the official government publications for the most accurate information.
Disclaimer: This is a simplified illustration and should not be considered professional tax advice. Consult with a qualified tax advisor for personalized guidance based on your specific financial situation.
