Library / Income-tax Act, 2025: The Professional's Master Guide
48. Case Study 1: Salaried Taxpayer with Property and Investments
Facts. Anita, 45, a resident, works in Bengaluru. For Tax Year 2026-27 her details are:
- Basic salary Rs. 12,00,000; HRA Rs. 4,80,000; special allowance Rs. 6,00,000; employer NPS contribution Rs. 1,20,000 (10% of basic). Professional tax Rs. 2,400.
- She pays rent of Rs. 40,000 a month (Rs. 4,80,000 a year) for her flat in Bengaluru.
- She owns a flat in Mysuru let out at Rs. 25,000 a month. Municipal tax paid Rs. 15,000. Home loan interest Rs. 3,50,000.
- Savings bank interest Rs. 18,000; FD interest Rs. 1,20,000; dividends Rs. 40,000.
- LTCG on listed shares Rs. 2,50,000; STCG on equity funds Rs. 60,000.
- Old regime deductions available: section 123 Rs. 1,50,000; section 126 Rs. 75,000 (self Rs. 25,000, senior parents Rs. 50,000); section 124 own NPS Rs. 50,000.
48.1 Step 1: salary
HRA exempt (old regime): least of 4,80,000; 50% of 12,00,000 = 6,00,000 (Bengaluru now 50%); 4,80,000 less 1,20,000 = 3,60,000 | 3,60,000 |
Particulars | Old regime (Rs.) | New regime (Rs.) |
|---|---|---|
Basic, HRA, special allowance, employer NPS | 24,00,000 | 24,00,000 |
Less: HRA exemption | (3,60,000) | Not allowed |
Less: standard deduction | (50,000) | (75,000) |
Less: professional tax | (2,400) | Not allowed |
Income from salary | 19,87,600 | 23,25,000 |
48.2 Step 2: house property
Rent (25,000 x 12) | 3,00,000 |
Less: municipal tax | (15,000) |
Net annual value | 2,85,000 |
Less: 30% standard deduction | (85,500) |
Less: interest | (3,50,000) |
Loss from house property | (1,50,500) |
In the old regime the loss is set off against salary (within Rs. 2 lakh). In the new regime it cannot be set off against any other head, and it is ignored.
48.3 Step 3: total income and tax
Particulars | Old regime (Rs.) | New regime (Rs.) |
|---|---|---|
Salary | 19,87,600 | 23,25,000 |
House property | (1,50,500) | Nil |
Other sources (18,000 + 1,20,000 + 40,000) | 1,78,000 | 1,78,000 |
Gross total income (excluding special rate gains) | 20,15,100 | 25,03,000 |
Less: section 123 | (1,50,000) | Not allowed |
Less: section 124 employer NPS | (1,20,000) | (1,20,000) |
Less: section 124 own NPS | (50,000) | Not allowed |
Less: section 126 | (75,000) | Not allowed |
Less: section 153 (savings interest, up to 10,000) | (10,000) | Not allowed |
Total income at normal rates | 16,10,100 | 23,83,000 |
Tax at normal rates | 2,95,530 | 2,95,750 |
LTCG: (2,50,000 less 1,25,000) x 12.5% | 15,625 | 15,625 |
STCG: 60,000 x 20% | 12,000 | 12,000 |
Tax before cess | 3,23,155 | 3,23,375 |
Cess at 4% | 12,926 | 12,935 |
Total tax | 3,36,081 | 3,36,310 |
Conclusion. The two regimes give almost the same tax; the old regime is lower by only Rs. 229. The addition of Bengaluru to the 50% HRA list under the Rules, 2026, the house property loss and the full use of deductions have brought the old regime level with the new. If Anita's rent or deductions were slightly lower, the new regime would win. This is a typical case where the computation must be run every year.
Key point Anita has no business income, so she can choose the regime afresh each year in her return. She should also tell her employer her choice at the start of the year so that TDS is deducted correctly. |
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