You have a choice to pay tax under the new regime of lower income tax rates by skipping tax exemptions/deductions. You can even continue to pay tax under the present income tax rules by claiming the relevant exemptions and deductions under Union Budget 2020. I will share my father’s opinion about which tax regime is better new or old.
Which is better old or new tax regime?
You must do a comparison by computing taxes under both tax schemes and selecting the appropriate system. It's also worth noting that the Income Tax Rules allow taxpayers without business revenue to choose between two options each year. You as a taxpayer may not comply with a single tax regime and may modify your tax structure on an annual basis. Taxpayers with company income, on the other hand, are only able to choose a new tax regime once, and that choice is permanent. While such taxpayers are permitted to remove such an option once, they will not be permitted to choose the new tax regime if they continue to generate company income.
You will need a rent agreement to claim HRA and deductions, So get it with NoBroker here.Both the Regime's Tax Rates:
Yearly Income (Rs) |
Old Tax Rate |
New Tax Rate |
Up to 2.5 Lakhs |
Nil |
Nil |
2.5 to 5 Lakhs |
5% |
5% |
5 to 7.5 Lakhs |
20% |
10% |
7.7 to 10 Lakhs |
20% |
15% |
10 to 12.5 Lakhs |
30% |
20% |
12.5 to 15 Lakhs |
30% |
25% |
15 Lakhs and above |
30% |
30% |
Every tax system has advantages and disadvantages. While the former tax system offered a number of additional tax incentives, the new system offers lower tax rates. You as a taxpayer can take advantage of several standard deductions, such as the Section 80C benefit of up to Rs. 1.50 lakhs, the standard deduction of Rs. 50,000 for salaried taxpayers, and a tax deduction of up to Rs. 50,000 for voluntary contributions to the National Pension Scheme (NPS) account.
Furthermore, tax benefits for HRA (House Rent Allowance) and LTC (Leave Travel Concession) exemptions may be available. If all of these deductions are fully utilised, the old tax regime may be considered.
You must be clear now about which tax regime is better new or old.
If you need property management services, then don’t forget to include NoBroker in the list. Read More: Is standard deduction applicable in new tax regime? What are deductions and exemptions? What is new tax regime? How to choose between old and new tax regime?Your Feedback Matters! How was this Answer?
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Authors Of The Question
Which is better old or new tax regime?
rajesh
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1 Answers
2 Year
2022-05-17T18:02:38+00:00 2022-05-17T18:02:40+00:00Comment
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