New Vs. Old Tax regime, which one is better to choose for you?

The Budget 2023, announced so many changes, out of which one change contains a very important information, however mostly people are failing to understand it.

Here , we are talking about Income tax regime. In simple words, this is about Income tax slab rate and benefits we were taking earlier and now.

From FY 2023-24, the NEW TAX REGIME is a default scheme and whoever not opting old regime,  it intentionally will automatically liable to comply the New TAX regime. A tax payer can opt for any tax regime at the time of filing Income tax return every year. However, salaried employees required to take decision initially in starting of month i.e. before 30^th April so that there TDS can be deducted according to slab rate beneficial to them otherwise Employer will default regime i.e. New Tax Regime.

Before choosing the tax regime, you must know which one is more suited to you according to your investments, savings and expenses. Once selected, your employer will not be able to change it in between the Financial year.

Now, let’s understand it with example, what are the issues and benefits with each regime and which regime is beneficial for you.

• Income upto 5 Lacs – Before or after deductions, go with Old tax regime and no need to pay taxes

• Income upto 7.5 lacs – Go with New tax regime, without any taxes

• Income above Rs 7.5 lakh – If you want to claim higher deductions, then on Income above 7.5 lacs, better to go with Old tax regime.

• Income above 5 Crores- Go with New tax regime due to reduction in rate of Surcharge from 37% to 25%. It seems the new tax regime is beneficial for the people who have basic earnings plus the high earning people.

It’s depend on your income that which regime you have to choose.

It is advisable to do your own calculations first considering your Income, Deductions and exemptions. The old regime also has a number of deductions and exemptions. Suppose, You are paying a home loan, then old regime is giving you benefit of the deduction on the interest component, which is up to Rs 2 lakh in a financial year, can be the favorable point to go in favour of the old regime. So, you will have to calculate your case and then come to a conclusion about the tax regimes.

Every individual/HUF having income above exemption limit are required to get their Income tax return filed even though they are not liable to pay any taxes as they are falling under exemption category.