Choosing between the old and new tax regimes requires careful consideration of their advantages and disadvantages.
Income Tax in India operates under a structured system of tax slabs. Your incomes are divided into specific ranges, each with corresponding tax rates. This approach ensures that those with higher incomes contribute proportionately more taxes. Understanding income tax slabs is crucial for taxpayers to plan their finances effectively.
There are two slabs for the same — the old regime and the new regime. Let’s take a look at various slabs under both tax regimes to find out how your income is taxed.
Old tax regime:
New tax regime:
Old tax regime or new tax regime?
While evaluating the two tax regimes, consider the available exemptions and deductions. Deducting these from your total income determines the net taxable income. Comparing this taxable income under the old regime with the tax liability under the new regime helps in making an informed decision.
It’s crucial to inform your employer of your chosen regime to ensure the correct tax is deducted at source (TDS) from your salary. Additionally, losses from house property, capital gains or business and profession should also be factored in, as they can impact your tax planning and regime selection.
The decision between the old and new tax regimes involves weighing the benefits and drawbacks of each. The old regime encourages savings habits and offers advantages as senior citizen benefits under Section 80TTB, benefiting those with substantial interest income.
In contrast, the new regime simplifies tax filing and benefits individuals with lower incomes and fewer investments but limited deductions. Both regimes cater to different taxpayer profiles, emphasising the importance of a personalised assessment based on individual financial circumstances.
Source: https://www.ndtv.com/business-news/union-budget-2024-new-and-old-income-tax-slabs-explained-6081512
© 2018 CA Chandan Agarwal. All rights reserved.