Difference between new tax regime and old tax regime

It is challenging for you as a taxpayer to select between the old and new tax regimes because both offer advantages and disadvantages. From April 1, 2020, (FY 2020-21). As a result, Section 115BAC of the Income Tax Act of 1961 (the Act) was created, requiring individual taxpayers and HUFs who choose certain tax deductions or concessions to pay lower tax rates. I have something to say regarding the difference between old tax regime and new tax regime.

Difference between new tax regime and old tax regime:

The new budget attempts to limit taxpayers' ability to save bonuses by putting more money in their hands. Individuals and Hindu Unified Families (HUF) do, however, have the option of choosing between the old and new tax regimes.

So, the old tax rates were 0% for annual income up to Rs. 2.5 lakhs and 5% for annual income between Rs. 2.5 lakhs and Rs. 5 lakhs. 10% for you if you are earning between Rs. 5 lakh and Rs. 12.5 lakh, and 30% if you are earning more than Rs. 12.5 lakh.

The income group between Rs. 5 lakhs and Rs. 7.5 lakhs would be supposed to pay income tax at a rate of 10% under the new tax regime. And if you are earning between Rs. 7.5 lakhs and Rs. 10 lakhs will be subject to a 15% tax rate. If you are earning between Rs. 10-12.5 lakhs and Rs. 12.5-15 lakhs would be taxed at 20% and 25%, respectively. In comparison to the former tax regime, it appears that the new tax regime will cause taxpayers to pay a greater tax amount in the years ahead.

New regime vs old regime:

Both the Regime's Tax Rates:

• All above-revised rates do not include any deductions under Chapter VI-various A's provisions.

• The tax will stay the same if you claim a deduction of Rs. 2.5 lakhs (standard deduction of Rs. 50,000, Rs. 1.5 lakhs u/s 80C, and Rs. 50,000 invested in NPS).

• The old tax slab rate would be Rs. 46,800 lower than the new regime if you additionally claimed a house loan interest deduction of Rs. 2 lakhs or HRA exemption.

This is your guide on the difference between old tax regime and new tax regime.