If your monthly salary is ₹2,00,000, understanding your tax liability is essential for efficient financial planning. With an annual income of ₹24,00,000, the taxes you pay depend on whether you opt for the Old Tax Regime or the New Tax Regime. Let’s break down the tax calculations and help you make an informed decision.
Key Information at a Glance
- Monthly Salary: ₹2,00,000
- Annual Salary: ₹24,00,000
- Applicable Tax Regimes: Old and New
- Key Deductions: Standard deduction, Section 80C, and other exemptions
Step-by-Step Tax Calculation for Tax on 2 Lakh Salary Per Month in India:
1. Determine Annual Income
Your total annual salary is:
- ₹2,00,000 × 12 = ₹24,00,000
This amount is considered for tax computation under both tax regimes.
2. Understand Deductions and Exemptions
Old Tax Regime
Under the old regime, you can claim various exemptions and deductions such as:
- Standard Deduction: ₹50,000
- Section 80C (Investments): ₹1,50,000
- Section 80D (Health Insurance Premium): ₹25,000
- HRA Exemption (if applicable): Depends on your rent and location.
New Tax Regime
The new regime offers reduced tax rates but does not allow deductions except for the ₹50,000 standard deduction.
3. Taxable Income After Deductions
| Particulars | Old Regime (₹) | New Regime (₹) |
|---|---|---|
| Gross Annual Salary | 24,00,000 | 24,00,000 |
| Less: Standard Deduction | 50,000 | 50,000 |
| Less: Section 80C (Investments) | 1,50,000 | 0 |
| Less: Section 80D (Health Insurance) | 25,000 | 0 |
| Net Taxable Income | 22,75,000 | 23,50,000 |
Tax Calculation
Old Tax Regime
| Income Slab | Tax Rate | Taxable Amount | Tax Payable (₹) |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | 2,50,000 | 0 |
| ₹2,50,001 – ₹5,00,000 | 5% | 2,50,000 | 12,500 |
| ₹5,00,001 – ₹10,00,000 | 20% | 5,00,000 | 1,00,000 |
| Above ₹10,00,000 | 30% | 12,75,000 | 3,82,500 |
| Total Tax Payable | ₹4,95,000 | ||
| Add: 4% Health & Education Cess | ₹19,800 | ||
| Total Tax Liability | ₹5,14,800 |
New Tax Regime
| Income Slab | Tax Rate | Taxable Amount | Tax Payable (₹) |
|---|---|---|---|
| Up to ₹3,00,000 | Nil | 3,00,000 | 0 |
| ₹3,00,001 – ₹6,00,000 | 5% | 3,00,000 | 15,000 |
| ₹6,00,001 – ₹9,00,000 | 10% | 3,00,000 | 30,000 |
| ₹9,00,001 – ₹12,00,000 | 15% | 3,00,000 | 45,000 |
| ₹12,00,001 – ₹15,00,000 | 20% | 3,00,000 | 60,000 |
| Above ₹15,00,000 | 30% | 8,50,000 | 2,55,000 |
| Total Tax Payable | ₹4,05,000 | ||
| Add: 4% Health & Education Cess | ₹16,200 | ||
| Total Tax Liability | ₹4,21,200 |
Tax Comparison: Old vs. New Regime
| Particulars | Old Regime (₹) | New Regime (₹) |
|---|---|---|
| Gross Annual Income | 24,00,000 | 24,00,000 |
| Total Deductions | 1,75,000 | 50,000 |
| Net Taxable Income | 22,75,000 | 23,50,000 |
| Total Tax Payable (with Cess) | 5,14,800 | 4,21,200 |
Savings in New Regime: ₹93,600
Choosing the Right Tax Regime
Old Tax Regime is Better If:
- You claim significant deductions under Section 80C, 80D, or other sections.
- You avail HRA exemption or deductions on home loans.
New Tax Regime is Better If:
- You prefer a simplified structure with lower tax rates.
- You have minimal investments or deductions to claim.
How to Reduce Tax Liability
- Invest under Section 80C: Utilize options like PPF, ELSS, or LIC premiums.
- Buy Health Insurance: Save taxes under Section 80D while protecting your family.
- Contribute to NPS: Get an additional ₹50,000 deduction under Section 80CCD(1B).
- Claim HRA Exemption: If you live in rented accommodation.
For a monthly salary of ₹2,00,000, the tax liability under both regimes depends on deductions and exemptions. While the old regime is beneficial for those with higher investments, the new regime is ideal for taxpayers seeking simplicity. Evaluate your financial priorities and choose the regime that maximizes savings.
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