New vs Old Tax Regime: If you are confused to choose one of the old or new tax regime, then we are telling you which option is better for you.
New vs Old Tax Regime: The time to file Income Tax Return is drawing near. Right now many taxpayers are in confusion as to which tax regime (New vs Old Tax Regime) they should choose. Taxpayers can choose any one tax regime in the New Tax Regime or the Old Tax Regime. There is confusion among taxpayers to choose between the two tax regimes. People are not able to understand that on how much salary they should choose which tax regime.
What is the new tax regime?
According to the new tax regime, there will be no tax on income of Rs 7 lakh. This tax regime is a default tax regime, that is, if you do not choose any type of regime, then this tax regime will be selected automatically. In such a situation, the company will deduct TDS as per the new tax regime. Apart from tax free income of Rs 7 lakh, you will also get the benefit of standard deduction of Rs 50,000.
In this case, the total discount will be Rs 7.5 lakh. In the new tax system, 30 percent tax will have to be paid on income above 15 lakhs. At the same time, 10 percent tax will have to be paid on income of 10 to 12 lakhs and 20 percent tax on income of Rs 12 to 15 lakhs. In this you do not get the benefit of rebate on investment.
0 to three lakh – 0 percent
- 3 to 6 lakh – 5 percent
- 6 to 9 lakh – 10 percent
- 9 to 12 lakh – 15 percent
- 12 to 15 lakh – 20 percent
- More than 15 lakh – 30 percent
What is the old tax regime?
According to the old tax regime, you will not have to pay any tax up to Rs 5 lakh. According to the old tax regime, 0% tax will have to be paid on an income of Rs 2.5 lakh. At the same time, 5 percent tax will have to be paid on income of Rs 2.5 to 5 lakh. In this, tax exemption is available on Rs 12,500.
In such a situation, a direct exemption of up to 5 lakhs is available in the old tax system. In this tax regime, 30% tax will have to be paid on income above Rs 10 lakh. On this regime, you will get the benefit of tax exemption in lieu of investment.
- Up to 2.5 lakh – 0 percent
- 2.5 lakh to 5 lakh – 5 percent
- 5 lakh to 10 lakh – 20 percent
- Above 10 lakh – 30%
Which is better from both the regime?
The government is emphasizing on the new tax system because in the coming time the government is planning to have only one tax system. In such a situation, to make the new tax regime popular, the gift of standard deduction has also been given in it.
The old tax regime is better for those who have invested in tax saving schemes like PPF, Sukanya Samriddhi Yojana, home loan etc. In such a situation, he can claim all these and take advantage of tax exemption. On the other hand, for those who run away from investment, the new tax system is better.
