(Your legal guide on estate planning, inheritance, will and more.). If you choose to avail deductions, you would have to pay 1,52,880 as per the old regime . New Income Tax Regime vs Old Tax Regime: Wondering how much income tax you will have to pay if you forego all deductions and exemptions in the new tax regime? Here is the list of exemptions and deductions allowed or disallowed under both regimes-, Old vs. New Tax Regime: Which one you should opt. Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Read more. It is not a question of which tax regime is better for 25 lakhs but rather about the amount that you can get deducted from your taxable income. If your tax-saving investments or spends are less than Rs 3,75 lakh then New Tax Regime will be better for you. There is widespread confusion as to 'which tax regime is better?' and the only answer that's truly correct is 'it depends! The new tax regime is available with lower tax rates and almost zero deductions/exemptions. Lets say a person earns 8 lakh rupees but they are allowed a deduction of 2 lakhs on various grounds this then changes their taxable income to 6 lakhs, however, under the new tax regime with no exemptions the person has not much room to chop down taxable income. The new tax regime is likely to be more beneficial for the low-mid income earners (annual income up to Rs 15 lakh)and for those in the Rs 5 crore and above income bracket. Budget Day garners considerable attention due to its impact on the nations financial landscape. Switching between the old and new to the new tax regime can be done either on a year-on-year basis or only once. Make sure which one to opt for with these 4 tips. new tax regime: Rs 9-12 lakh annual income: Old or new tax regime will These tweaks in the tax slabs will surely lessen the burden on taxpayers and allow individuals to plan their long-term financial goals in a more efficient manner. Get live Share Market updates and latest India News and business news on Financial Express. 5 lakhs up to the taxable income of Rs.5,15,620/-, Your email address will not be published. Also, a tax rebate on income earned up to INR 7 lakh, which was INR 5 lakh earlier under section 87A. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. How To Save Tax For Salary Above 7 Lakhs? The new tax slabs are 1) 0-3 lakh - Nil, 2) Rs 3-6 lakh - 5 per cent, 3) Rs 6-9 lakh - 10 per cent, 4) Rs 9-12 lakh - 15 per cent, 5) Rs 12-15 lakh - 20 per cent and 6) 30 per cent for anything income above Rs 15 lakh. The minimum deductions needed if annual income is Rs 10.5 lakh: If your annual income is Rs 10.5 lakh, then you will have to pay an income tax of Rs 60,000 under the new tax regime. Under the old system, income up to INR 2.5 lakh is exempt from personal income tax with the maximum rate applicable on income above INR 10 lakh which is 30%. READ | Donald Trump India Visit Live Updates. For an individual taxpayer, FY 2023-24 is another instance where they get to choose between the old tax regime and the new tax regime while filing their income tax returns. Clear can also help you in getting your business registered for Goods & Services Tax Law. And, an individual with INR 15 lakh annual income will have to pay a tax of INR 1.5 lakh which will be down from INR 1.87 lakh. Modi Govt says no 20% TCS on Credit Card payments up to Rs 7 lakh under LRS, Is there a way to reduce TCS and save taxes while travelling abroad? *Super Rich Tax Cut: Highest surcharge rate on the income above INR 5 crore to be reduced from 37% to 25% in the new tax regime. Finance Minister Nirmala Sitharaman introduced a new income tax regime for the first time while presenting the Budget 2020. Here is all you need to know. How to Save Tax for Salary Above 30 Lakhs? After providing the above details, the tax calculator gives a comparison of tax liability under both Old and New Regimes. Since the eligible deductions, sources and quantum of income differs for every individual, one rule cannot be applied to all. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India. Copyright TaxGuru. While we have looked at a lot of high figures, how does it work out for lower-income people remains to be seen? Comparing tax regimes for 30 lakhs: old vs newdetermining which one is more advantageous. Hi Sir, It will come in at 6.08 lakh under the new tax regime.. The government said these measures will provide major relief to all taxpayers who opt for the new regime. For reprint rights: What are income tax rates and slabs under the new tax regime? The straight deduction of Rs 3.5 lakh will certainly help in reducing tax under old tax regime. On the other hand, the new tax regime has the benefit of the standard deduction and there is full rebate provided to individuals earning up to INR 7 lakh annually. Budget 2023: Old vs new income tax regime; which is better for 20 lakh Contrary to the new regime, there were fThe new tax regime is much wider in scope with five tax slab rates ranging from 0% to 30%, with the lowest starting with INR 3 lakh. When will a salaried employee Opt the option of new or old tax regime? But again, we cant let go of the deductions and exemptions out of our minds since they are major game changers. New Tax Regime: All the changes you should know about. 10 lakh would be taxed at 15 percent. While those belonging to the low or middle-income group have to bear a lesser one. The new tax regime becomes the . People who were earning above 30 lakhs earlier were subject to a 30% tax and the new tax regime has changed that percentage by 0. Maintained by V2Technosys.com. Apr 12, 2023. Old vs New Income Tax Regime: Which one you should choose? New Tax Regime Let's start with the new tax regime. The person would pay 2,96,400 as tax in both of these cases, however, if the person can get a dedication of more than 425k then they would benefit from the older tax regime. Making the wrong decision can significantly affect your take-home income. Tata Power stock jumps 3% today after bagging Rs 1744 cr state govt order; Should you buy, sell Tata Power? Generally, HRA comprises 50 per cent of the basic salary. Actual travel ticket expenses exempt for 2 trips in 4 years under 10(5). Under the new regime, the tax outgo is more than Rs 60,000 higher. In addition, the maximum rate of surcharge is 25 per cent in the new tax regime, whereas the maximum surcharge rate under the old regime was 37 per cent. Is new or old tax regime better? The answer to this question of which regime is better for Rs 21 lakh to Rs 30 lakh income depends on how much tax deductions you are eligible for. Harley-Davidson X440 vs Triumph Speed 400 comparison Hero or Bajaj? Old vs New Tax Regime Old Tax Regime vs. New Tax Regime - Which is Better? Ans: In the case of Salaried Person option can be change every year. However, at the time of filling the personal tax return, the employee can change the tax regime. An employee may choose between old and new tax regimes at the beginning of the year and intimate the employer, or at the time of joining new employment during the year. It is to be noted that the old tax regime has enough room for claiming deductions against various allowances forming part of salary (eg. As per the amendments proposed by the Union Budget 2023 in the new tax regime, from FY 2023-24 onwards taxpayers will be required to opt for the old tax regime and the new tax regime will be the default option. We can see in the above example that the old tax regime is beneficial to Taxpayer 1 as taxes are less by INR 37,440. Net taxable income will come in at 25.65 lakh. Let us take a look at the old tax regime tax slab to get an idea regarding how much tax you need to pay in case your income is above Rs 12 lakh: Old Tax Regime Tax Slabs Now let us check out all the exemptions and deductions applicable in case you opt to pay your tax using the old tax regime: Exemptions House Rent Allowance Leave Travel Allowance The new Tax regime (Section 115 BAC) is applicable to; And, If assessee opts for New tax Regime , the total income shall be computed without any exemption or deduction under the provisions of:-, but, include following deduction and exemption. As we saw in the case of 20 lakhs income the threshold or break-even point was at 4,25,000 rupees similarly if you cross the break-even point in claiming deduction/exemption in case of 25 lakhs and get more maximum possible deduction then the old tax regime works out for you and if not then it is better to go with the newer tax regime. Q4. If you have an income of 25 lakhs, then it might be beneficial for you to pursue the new or the old tax regime depending on the number of deductions and exemptions you can claim. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. However, after Rs 10 Lakh Annual Salary (CTC) Old tax regime is only better because of allowance and deduction available under this regime. Sir, my gross salary for the FY 2023-24 will be Rs.13,85,145/- . My Tax Rate Regime Compare as below: Income Slab. Press Esc to cancel. He is a chartered accountant and has 20 years of experience in advising clients on tax and regulatory issues. The tax rate remains unchanged while the exemptions and deductions are out of the picture. But since we have taken a step down in terms of income this also impacts reduction/exemption that goes down as the income comes down. Without Exemptions/Deductions, the tax calculator shows those earning Rs 6 lakh annual income will have to pay Rs 23400 as tax as per the new regime. Budget 2023: Old vs new income tax regime; which is better for 30 lakh To use this calculator, you will have to provide basic inputs like: 1. We looked at which tax regime is better for 30 lakhs and 20 lakhs. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. Which Tax Regime is better for 7 lakhs salary All Rights Reserved. Note- The information provided in this article is generic in nature and for informational purposes only. ELSS mutual funds- Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years), Childrens Education fees: (Rs 25,000 to Rs 1 lakh), EPF: Around Rs 30,000 Rs 72,000, i.e., 12% of your basic + DA (contribution already made by your employer), Term plan insurance- Rs 12,000 premium (Around Rs 1 Crore cover), ULIP or endowment plant- Rs 12,000 premium. In the above example, for an income of Rs 20,00,000, the old tax regime is beneficial. Consequently, Section 115 BAC was to the Income Tax Act, 1961 (the Act) that prescribed reduced tax rates for individual taxpayers and HUFs on forgoing specified tax deductions or exemptions. Which income tax regime should you choose for FY 2023-24? However, prima facie new tax regime may seems beneficial due to reduced tax rates at various slabs. The tax payable under the old regime without exemptions and deductions will be Rs 1,79,400. 30%. How To Save Tax For Salary Above 10 Lakhs? Which Tax Regime is Better for Rs 12 Lakh Salary You can invest in the, If you have disabled dependents for whom you bear, Maturityamount of a LifeInsurancePolicy. It has become clear that any person earning Rs 7.5 lakh annually or lower will benefit from the new income tax regime. The tax calculator can be accessed at https://incometaxindia.gov.in/Pages/tools/115bac-tax-calculator-finance-bill-2023.aspx. Should you choose the new tax regime from 1st April 2023? Rs 50 per meal (max 2 meals a day)Annual= Rs 31,200 (50*2*26 days*12 months), Rs 50,000 (Will be given to all without any restrictions), Tax benefit of Rs.1,50,000 per year. How to Save Tax For Salary Above 20 Lakhs? However, if you claim further deductions for health insurance, investment in NPS, education loan and so on, the existing regime will be helpful. tax slabs under the new vs old tax regime. For reprint rights: Syndications Today, Old or New Tax Regime? My annual income is 10 to 12 lakhs. There is no single answer to this as it depends on your annual earnings and component of exemptions and deductions included in it. Losses From House Property cannot be set off against salary or any other head of income. Consequently, the tax rates are now 0%, 5%, 10%, 15%, 20% and 30% in the six slabs. It might seem simple on the surface, but it isnt as easy to decide what tax regime is better, the new one or the old one. Income Tax Calculator 2023: Which regime is better for Rs 10 lakh If you choose the new tax regime, you will have to pay 1,95,000, compared to the old regime where you will have to pay about 2,73,000. Income tax Calculator: Calculate your Income Tax here. Best Small Cap Mutual Funds in 1 year (July 2023): Top 10 schemes With 33% to 45% SIP returns, Samsung Galaxy M34 5G first impressions: Heavyweight under Rs 20,000, HOUSING DEVELOPMENT FINANCE CORP SHARE PRICE, May Economic Review says frail global demand may challenge FY24 growth outlook. How to choose tax regime for FY 2023-24: Selecting the best option between old and new tax regimes is proving difficult for many salaried taxpayers, especially for those who are in the higher . If the exemptions and deductions are used sensibly and to the maximum, then they go a long way in establishing the older tax regime better than the newer one. Under Section 115BAC, the basic exemption limit has been raised from Rs 2.5 lakh to Rs 3 lakh. The information provided on this page is for informational purposes only. A recently launched, official income tax calculator provided by the Income Tax department gives an insight into how much taxpayers can benefit if they give up the deductions and exemptions and opt for the new regime. The basic exemption limit in the new tax regime has been increased to INR 3 lakh, which was INR 2.5 lakh earlier. As the new budget was unveiled, it had sparked a diverse range of opinions and comparisons. Old vs New: Which Tax Regime Is Better For You? Rental tax calculation rules you should know before ITR filing in 2023, Income Tax Payment Online: Full List of Banks for e-payment (e-Pay Tax) on e-filing portal, Your queries: Income Tax; Chosen new tax regime? The tax payable under the old regime without exemptions and deductions will be Rs 46,800. In the above example, for an income of Rs 12,50,000, the new tax regime is marginally beneficial. However, you do not get full deduction on HRA amount. Ans : An employee have to opt the tax regime option with your employer in starting of the FY 23-24. From Financial year 2020-21, taxpayers (Individuals and HUFs) has an option to choose between Old Tax regime and the new Tax Regime. You just need to fill in relevant details such as gross income, deductions and exemptions out tax liability and the calculator will determine which option works better for you. The new regime seems to be more beneficial for the taxpayers falling into highest surcharge bracket. Below is an illustration of how two taxpayers have the same gross income but are eligible for different tax deductions/exemptions. Best Tax Regime for Rs 21 Lakh to Rs 30 Lakh Salary. Net tax payable after factoring in the education and health cess will be at 2.82 lakh. Old vs New Income Tax Regime: Which one you should choose? Ltd. ICICI Prudential Technology Fund Direct Plan Growth, Aditya Birla Sun Life Tax Relief 96 Growth, Aditya Birla Sun Life Digital India Fund Direct Plan Growth, SBI Technology Opportunities Fund Direct Growth. As straightforward as the question is as to which tax regime is better for 30 lakhs, we all saw how there are a few things to consider before you end up making that decision. It covers all the ways in which you can save taxes by availing the deductions available under various sections of the IT Act. So under the old tax regime, this person pays 32,500 rupees without cess and under the new tax regime, the person pays 35,000 rupees. 10 lakh+ slab where you paid 30 percent, has been broken into three parts with rates of 20 percent for Rs. It can be said that if you are claiming more deductions and exemptions then opting Old tax regime works better for you. help you decide which tax regime is better for income above 30 lakhs and, Section 10 of Income Tax Act: Everything to Know, INDMoney Refer and Earn Program: Referral Code Benefits, Report Hints at Widespread Confidence in Ability of Britain to Survive Financial Crisis, Manish Malhotra Net Worth, House, Annual Income, Survey Highlights Causes of Financial Stress among Young Canadians, Swiss Re Survey Highlights Role of Insurance in Economic Development in Asia, Doubts Linger in Canadian Minds Despite Positive Economic Predictions, How High Wage Expectations Fuel Inflationary Pressure for Businesses, Financial Security Shines for Childless Older Individuals and Couples in Irish Society. For a salaried taxpayer with an annual income of Rs 60 lakh, again the current, existing regime with deductions is more tax efficient. The table below analyses the income tax outgo in the existing regular income tax regime, the current concessional income tax regime, and the new income tax regime announced by FM Sitharaman in Budget 2023: However, with deductions and exemptions out of the picture, the scenario does change. The only benefit allowed under the New Tax Regime is the standard deduction of Rs 50,000, also available in the Old Regime. 10 to 12.5 lakh. So, No Tax required to be paid till Rs 7 lakhs taxable income. Based on the amendments proposed in Union Budget 2023, the new tax regime has been made as a default one, and the taxpayers will have to select the old tax regime if they wish to use it. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Behind CM washing feet, MP BJP worry over its hold on tribal ground, This website follows the DNPAs code of conduct. 7 lakhs, which is not available for those who follows Old Tax Regime wherein the tax payable is more than the income that exceeds limit of Rs. The tax payable under the old regime without exemptions and deductions will be Rs 1,17,000. Heres how the old tax regime differs from the new and what you must choose for as a taxpayer. Here is the quick comparison table between tax rates at different slabs under Old Tax Regime vs. New Tax Regime. There are benefits and drawbacks to the new tax regime. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. However, old regime is better in which you will save 14,040. The tax slabs under the new vs old tax regime are: Note: The tax slabs under new regime has been revised in Budget 2023. FinMin explains, Salaried? As, the old tax regime provides deductions and no tax on income up to INR 5 lakh. The only way you can save this tax is if you opt for the old tax regime and utilise deductions in such a way that your total deduction is Rs 2,62,500. As the new financial year begins, it is essential to decide between the old and new tax regime, as this choice determines how much income tax your employer will deduct from your monthly salary. This is because the old tax regime allows you a tax deduction on principal amount upto Rs 1.5 lakh under section 80C and Rs 2 lakh under section 24(b) on the interest amount for self-occupied property. Download PDF 22 May 2021 6,906 Views 3 comments With promises to simplify the Income Tax Act, the Finance Ministry has, from the AY 2021-22, brought a 'New Taxation Regime' - something which has only complicated the law. Thus the total tax benefit as per new regime would be Rs 39,000. However, you need to know that interest paid on housing loan taken for a rented-out property can be claimed as deduction under section 24(b) in the new tax regime as well. Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Download Financial Express App for latest business news. However, the law provides such taxpayers one single option of switching back to the old tax regime should their circumstances change. Hello Sir, My Taxable income comes to around 14 - 15 lakh approx..I do have normal 80 C,80CCD investments..My tax comes to around Rs 2.30 lakh per year.So as I see with new tax regime,I see tax is flat Rs 150000 approx.. . The government has taken cognizance of the fact that the Act has various exemptions and deductions which make compliance by the taxpayer and administration of the tax laws by the tax authorities a burdensome process. 5) If you have an HRA deduction to claim, the old tax regime might be better for you. If the gross income is understood to be 10 lakhs, then the various exemptions and deductions under the older regime bring down the taxable income which is not the case with the new tax regime. Try again. The Tax Calculator shared by the Income Tax Department will give you a comparison of tax liability under Old and New Regimes to be applicable from Assessment Year 2024-25. Which Option is better for salaried Person for FY 23-24. Age/Gender (Male, Female, Senior Citizen, Super Senior Citizen). It is the lowest of the following three amount a) The HRA amount received by you b) 50 per cent of the HRA amount if you live in a metro city otherwise 40 per cent, c) actual rent paid minus 10 percent of your basic salary including dearness allowance. Factors such as income sources, deductions, and long-term financial goals should be considered to determine which regime aligns better with ones overall tax planning strategy. When you ask which tax regime is better for 7 lakhs the answer is a bit twisted. Without Exemptions/Deductions, the tax calculator shows those earning Rs 12 lakh annual income will have to pay Rs 1,19,600 as tax as per the new regime. In such a situation, they have the choice to opt for the old tax regime while filing the tax return though the employer had withheld taxes based on the new tax regime. As a result, people belonging to high-income groups generally bear a higher taxation rate. Net taxable income will come in at 15.30 lakh. And so under the old tax regime, a person earning would pay a tax amounting to 62,500 with a cess of 2,500 rupees added to make it 65,000 rupees. 68 murdered in Maliana, all accused acquitted 36 years later, residents ask: So who killed our families? Individuals who have income from business or profession cannot switch between the new and old regimes every year. Frequently Asked Questions How much tax should I pay for 15 lakhs? !' HOW TO SAVE TAX FOR SALARY ABOVE 30 LAKHS? If you have invested or spent less than Rs 3,00,000, then the new regime will be better for you. - Quora. How To Save Tax For Salary Above 50 Lakhs? Also Read: Section 10 of Income Tax Act: Everything to Know. How to decide which Income Tax Regime is good for you However, under the old tax regime with the deductions and exemptions in place, the taxable amount itself came down to 10,75,000 rupees and when the tax was calculated along with cess then the final figure would come to a total of 14,04,000 rupees and in the existing tax regime the tax payable would be 1,95,000 rupees so you see which tax regime is better for 15 lakhs. The Government of India introduced a new optional tax rate regime starting from April 1, 2020 (FY 2020-21), for individuals and the Hindu undivided family (HUF). Here is a simplified assessment of both the regimes to answer a few pertinent questions. 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It generally looks like this: When you are tax planning for salary above 30 lakhs, you can get deductions on the following: Lets take an example for better understanding: Additionally, if you are eligible, you may claim these deductions: Note: You might not always have a home loan or be interested in the investment plans listed under Section 80C. I have investment approx 1.80-2 lakh under 80C Taxable Salary Income (-) Deductions = Net taxable income. The calculator shows that this individual will have a tax liability of Rs 33,800 under the old regime and Rs 54,600 under the New Regime. (until 31st March 2023) Not many taxpayers can claim deductions on various investments, expenses and loans to the tune of 3.75 lakh per annum, the finance ministry official said. Even though the tax rate is the same for this slab in both the regimes, the amount you will have to pay may vary.
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