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Old Tax Regime vs New Tax Regime- Important Points To Checklist Before Deciding The Winner
Written by Gagandeep Arora - Printed on - Date - 20th Apr 2023
As announced by our honourable Finance Minister Nirmala Sitharaman the new tax regime is the default tax regime.If you still find your liking towards the old tax regime you can avail the benefit but it is important to declare their choice of old tax regime or new tax regime to their employer in the beginning of the new year. This is an important factor to be decided for the financial year as it will affect your take-home income majorly. To help you clear your doubts the following list has been prepared.
Tick These Boxes In The Checklist
#Income - The tax slab in the new income tax regime starts from Rs. 7
lakh, therefore if you are falling below the threshold then there is no
tax.Moreover there is a standard deduction of Rs.50,000 in the new tax regime.
Wisely, your income bracket is a major factor in making this decision.
# Tax Saving Investments- There are no benefits available for the tax
saving investments under the new tax regime thus if you have no such investment
then mark another tick for it.
# Deduction u/s 80C- If you have a deduction of Rs.1.5 lakh then the new
tax regime would be a better choice but if there is a home loan deduction along
with this then it will be better to choose old tax regime as it allows a tax
deduction on principal amount up to Rs. 1.5 lakh under section 80C and Rs. 2
lakh under section 24(b) on the interest for self-occupied property which will
bring down the tax under the old tax regime.To sum it up, deduction under
section 80C along with home loan it is better to tick in front of old tax
regime.
# HRA Deduction- If you want to avail the benefit of HRA then the old
tax regime is the regime to opt for.
# Other Exemptions- Exemptions like Leave travel allowance , house rent
allowance , children education allowance, deduction for professional tax ,
interest on housing loan are not available under the new tax regime whereas a
few exemptions like interest paid on housing loan taken for a rented-out
property can be claimed as deduction under Section 24(b) under the new tax
regime.
# Surcharge- The maximum rate of surcharge is 25 % in the new tax regime
and 37% in the old tax regime so it is better to tick to the new tax regime if
you fall into the higher surcharge bracket.
# NPS Deduction- Under the new tax regime, NPS contributions are
available for tax deductions of up to 10% of salary including dearness allowance
and further deductions of up to Rs.50,000 under sec 80CCD (1B).
# Income tax Calculator- This is the best tool and the most searched
online tool to help you calculate your taxes according to both the regimes for
complete guidance and comparison for which one is more favourable.
Be Wise And Declare Your Preferred Regime
As clearly stated in the union budget it is important to declare the regime an
assessee wants to go for in the FY 2023-24 ,in the beginning of the year to
their employee otherwise by default you will fall under the new regime.To make
the calculation easier we have tax experts who will not only guide you about
both the regimes but also calculate your tax payable according to both the
regimes with the help of Income tax calculator. If you have any confusion then
make a call to our tax expert or visit our website for professional
consultation.
