Income Tax in India — A Simple Guide
Old vs new tax regime, investment taxation, ITR forms, and common deductions explained clearly.
| Feature | Old Regime | New Regime |
|---|---|---|
| Standard Deduction | ₹50,000 | ₹75,000 |
| Section 80C (Investments) | Up to ₹1.5 lakh | Not available |
| Section 80D (Health Insurance) | Up to ₹25,000 | Not available |
| HRA Exemption | Available | Not available |
| Home Loan Interest (24b) | Up to ₹2 lakh | Not available |
| NPS Deduction (80CCD) | Up to ₹50,000 | Employer NPS only |
| Basic exemption limit | ₹2.5 lakh | ₹3 lakh |
| Rebate u/s 87A (zero tax) | Up to ₹5 lakh income | Up to ₹7 lakh income |
| Best for | Those with many deductions | Those with fewer deductions |
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
* Surcharge and cess (4% health & education cess) apply additionally. Income up to ₹7 lakh has zero tax liability under Section 87A rebate.
Short-term capital gains on equity (held <1 year): taxed at 20%. Applicable on stocks and equity mutual funds sold within 1 year of purchase.
Long-term capital gains on equity (held >1 year): exempt up to ₹1.25 lakh per year. Beyond that, taxed at 12.5% without indexation.
All gains (regardless of holding period) are added to your income and taxed at your income slab rate. No indexation benefit from April 2023 onwards.
STCG (held <2 years): taxed at slab rate. LTCG (held >2 years): 20% with indexation, or 12.5% without. You can reinvest in another property to save tax under Section 54.
FD interest is fully taxable as income at your slab rate. Banks deduct 10% TDS if interest exceeds ₹40,000 per year (₹50,000 for senior citizens).
Physical gold and Gold ETFs held >3 years: 20% LTCG with indexation. Sovereign Gold Bonds held till maturity (8 years) are fully tax-exempt on capital gains.
Salaried individuals with income up to ₹50 lakh, one house property, and interest income.
Individuals with capital gains, more than one house, or foreign income/assets. Not for business income.
Individuals with business or profession income (including F&O trading).
Individuals opting for presumptive taxation under Section 44AD/44ADA. For small businesses and professionals.