New Tax Regime vs. Old: Which One Saves You More on Taxes?
Are you ready to file your Income Tax Returns for the Financial Year 2023-24? The due date for individuals is 31st July 2024. The Finance Bill, 2023 has introduced several attractive features in the New Tax Regime. Here’s a quick comparison to help you decide which regime benefits you the most.
Benefits of the New Tax Regime:
- Standard deduction of ₹50,000 for salaried employees.
- Attractive tax rates compared to the Old Tax Regime.
- No need to invest in Life Insurance, Health Insurance, PPF, Home Loans, etc., to save taxes.
- Zero tax for individuals with a total income up to ₹7 lakhs or salary up to ₹7.5 lakhs.
- Deduction to the extent of 2 lakh on Home Loan Interest paid on the property given on rent.
- Deductions for NPS contributions, gratuity, leave encashment, and contributions to the Agniveer Corpus Fund.
- Transportation allowance deduction for differently-abled individuals from salary.
- Tax exemption for Voluntary Retirement Scheme.
- Standard deduction for family pension up to ₹15,000 or 1/3rd of the pension amount, whichever is lower.
Benefits of the Old Tax Regime:
- Standard deduction of 50,000 for every salaried employee.
- Deduction available for professional tax paid on employment.
- Deductions under Chapter VIA (e.g., Life insurance premiums, health insurance premiums, principal repayment on home loans).
- Multiple exemptions (e.g., House Rent Allowance, Leave Travel Allowance, leave encashment, gratuity).
- Home Loan Interest paid is available on both self occupied and let out property with a overall limit of 2 lakh.
| Old Tax Regime | |
|---|---|
| Net Taxable Income | Tax Rate |
| Up to 2.5 Lakh | 5% on income which exceeds 2.5 Lakh |
| 2.5 Lakh to 5 Lakh | 5% on income which exceeds 2.5 Lakh |
| 5 Lakh to 10 Lakh | 20% on income which exceeds 5 Lakh |
| Above 10 Lakh | 30% on income which exceeds 10 Lakh |
| New Tax Regime | |
|---|---|
| Net Taxable Income | Tax Rate |
| Up to Rs. 3 Lakh | Nil |
| 3 Lakh to 6 Lakh | 5% on income which exceeds 3 Lakh |
| 6 Lakh to 9 Lakh | 10% on income which exceeds 6 Lakh |
| 9 Lakh to 12 Lakh | 15% on income which exceeds 9 Lakh |
| 12 Lakh to 15 Lakh | 20% on income which exceeds 12 Lakh |
| Above 15 Lakh | 30% on income which exceeds 15 Lakh |
Tax Comparision illustration for multiple income levels at levels of eligible deductions.
To Simplify:
- If your eligible deductions are more than ₹3.75 Lakhs, the Old Regime is beneficial.
- If your eligible deductions are less than ₹3.75 Lakhs and your income exceeds ₹15 Lakhs, the New Regime is beneficial.
Download our Excel Tax Calculator to see which regime is better for you. For expert assistance, reach out to us through WhatsApp.
It would have been more useful if you had provided what type of Assessee such as HUF, Individual etc also the Advance tax installments payable, interest under section 234 etc