Difference between old and new tax regime

The recent Budget 2023 has caused a lot of confusion among taxpayers regarding the choice between the old and new tax regimes. The government has introduced various incentives in the 2023 Budget to encourage the adoption of the new regime. These changes show that the government’s intention is to have taxpayers transition to the new regime and eventually phase out the old one. Though the new regime is now the default tax regime, the old tax regime will continue to exist. Let’s look at both regimes and see which regime to opt for in 2023. New Tax Regime A new tax regime was introduced in Budget 2020 wherein the tax slabs were altered, and taxpayers were offered concessional tax rates. However, those who opt for the new regime cannot claim several exemptions and deductions, such as HRA , LTA , 80C , 80D and more. Because of this, the new tax regime did not have many takers. The government in Budget 2023 introduced 5 key changes to encourage taxpayers to adopt the new regime. They are: • Higher Tax Rebate Limit: Full tax rebate on an income up to ₹7 lakhs has been introduced. Whereas, this threshold is ₹5 lakhs under the old tax regime. This means that taxpayers with an income of up to ₹7 lakhs will not have to pay any tax at all under the new tax regime! • Streamlined Tax Slabs: The tax exemption limit has been increased to ₹3 lakhs and the new tax slabs are: Income Slab Old Tax Regime New tax Regime (until 31st March 2023) New Tax Regime (From 1st April 2023) ₹0 - ₹2,50,000 ...

New Delhi: Finance Minister Nirmala Sitharaman has increased the rebate limit for individual taxpayers from Rs 5 lakh to Rs 7 lakh a year. "..Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax," Ms Sitharaman said while presenting Budget 2023 in parliament today. She also announced new tax slabs and scrapped the old twin-structure system that was unboxed in 2020, which taxed citizens under 25 per cent without exemptions and 30 per cent with exemptions allowed. Difference between old and new tax regime "I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh," Ms Sitharaman said. In Budget 2020, the Finance Minister had given an option to individual taxpayers to either continue in the old rate, under which they could still claim tax exemption, or opt for the reduced new rate but with no scope for claiming exemptions. The old tax regime had 30 per cent tax rate for those whose income was Rs 15 lakh a year, but they could claim exemptions. Those who opted for the new regime first announced in 2020 and whose income was over Rs 15 lakh were taxed at 25 pe...

As the new financial year 2023-24 has just commenced, it is time for salaried individuals to make the important decision of selecting the taxation regime in which their income will be taxed. In the recent Budget 2023, Finance Minister Nirmala Sitharaman presented certain changes in the new tax regime, such as changes in tax slabs, rates, and more. What is the basic difference between the old and new tax regimes? The major difference between the old and new tax regimes is the income tax slab rates and the ability to claim exemptions and deductions. Under the old tax regime, taxpayers can claim exemptions and deductions on investments and expenses such as house rent allowance, medical insurance, etc. However, under the new tax regime, most of these exemptions and deductions have been removed and replaced with a reduced income tax slab rate. Are all the exemptions removed from the new tax regime? Under the revised new tax regime, an individual will not be able to avail of the same tax deductions and exemptions that were available under the old regime. This includes deductions such as House Rent Allowance (HRA) tax exemption, Leave Travel Allowance (LTA) tax exemption, and deductions up to a limit of ₹1.5 lakh under Section 80C. However, there is one crucial benefit in the new regime - a standard deduction of ₹50,000. This is applicable to both the old and new tax regimes. This means that unless the employee opts for the old tax system, the employer will automatically consider...

While there are merits and demerits of both the old and new regimes, it becomes cumbersome for taxpayers to pick the best-suited tax regime. Here is a simplified assessment of both the regimes to answer a few pertinent questions. 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). 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. 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. In a major boost to the new income tax regime and to make it more pleasing to the middle-class common individual, the government has announced significant changes to the new income tax regime. The basic exemption limit in the new tax regime has been increased to INR 3 lakh, which was INR 2.5 lakh earlier. Also, a tax rebate on income earned up to INR 7 lakh, which was INR 5 lakh earlier under section 87A. It is to be noted that the old tax regime has enough room for claiming deductions against various allowances forming part of salary (eg. HRA, LTA, etc) and also for specified investments/ expenses such as Public Provident Fund (PPF), National Pension Scheme (NPS), repayment of housing loan, payment of tuition fees, ...

LinkedIn and 3rd parties use essential and non-essential cookies to provide, secure, analyze and improve our Services, and to show you relevant ads (including professional and job ads) on and off LinkedIn. Learn more in our Select Accept to consent or Reject to decline non-essential cookies for this use. You can update your choices at any time in your The 2023 budget brought with it a revamped income tax regime, giving taxpayers the option to choose between the old and new regimes. While the old regime offers more deductions and exemptions, the new regime boasts lower tax rates. Choosing between the two regimes can be a complex decision that depends on your income level and the total deductions you claim. If you're a salaried individual, chances are you must have received an email from your HR or payroll team asking you to select your income tax regime for the financial year. If you fail to make a choice, the new tax regime will be set as default and can only be changed when filing your tax returns. Here’s how the old tax regime differs from the new and what you must choose as a taxpayer. Lower Tax Rates The new regime has seven tax slabs ranging from 0% to 30%, with the highest tax rate applicable on income above INR 15 lakh. On the other hand, the old regime,offers over 70 exemptions and deductions, including popular ones like HRA, LTA, and Section 80C. Taxpayers can choose which regime works better for their specific financial situation. Higher Tax Rebate Limit Full tax...

ગુજરાતી • • • • • • • New • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Live • Live • • • • • • • • • • • • • • • • • • • Introduction Governments worldwide have made it mandatory for citizens to pay taxes on their earnings annually. The Indian government, the Income Tax Department, and the Finance Ministry created a tax regime that the Indian citizens followed until 2020. In the 2020 annual budget, Indian Finance Minister, Nirmala Sitharaman, introduced a new tax regime offering simplified tax slabs against tax exemptions. Indian citizens can choose between the old and new tax regimes per their earnings and eligible tax deductions. What is the Old Tax Regime? The old tax regime is the single tax structure followed until 2020, establishing specific tax slabs per the citizens' earnings to pay taxes and tax deductions for investing the earned amount. When considering the difference between the old and new tax regimes, understanding the structure and the eligible exemptions is crucial. Most people in India utilize the old tax regime, which offers higher tax rates to the citizens but various ways to lower their taxable income. The old tax regime offered 70 tax exemptions per the Income Tax Act of 1961. In the old tax regime, the Income Tax Act provided some exemptions within the...

Last updated on April 19th, 2023 The Finance Minister, Nirmala Sitharaman presented the The new tax regime was introduced to simplify taxes and reduce the burden of compliance on taxpayers. The major difference between both of these tax regimes is Even 2 years post the introduction of the New tax regime under • • • • • • • Tax Slab Rates Under the New Regime, new Income Range Rates as per Old Regime Rates as per New Regime (up to AY 2023-24) Up to INR 2,50,000 Nil Nil INR 2,50,001 – 5,00,000 5% 5% INR 5,00,001 – 7,50,000 20% 10% INR 7,50,001 – 10,00,000 20% 15% INR 10,00,001 – 12,50,000 30% 20% INR 12,50,001 – 15,00,000 30% 25% Above INR 15,00,000 30% 30% Income Range Rates as per New Tax Regime (AY 2024-25 onwards) Up to INR 3,00,000 Nil INR 3,00,001 – 6,00,000 5% INR 6,00,001 – 9,00,000 10% INR 9,00,001 – 12,00,000 15% INR 12,00,001 – 15,00,000 20% Above INR 15,00,000 30% Basic Exemption Limit Under the new tax regime, the basic tax exemption limit will remain the same for all assesses including senior citizens. Therefore, in case you opt for the new regime, there will be no higher tax exemption for the senior and super senior citizens. Age New Regime Exemption Limit (AY 2024-25 onwards) New Regime Exemption Limit (up to AY 2023-24) Old Regime Exemption Limit People Below 60 Years of Age INR 3,00,000 INR 2,50,000 INR 2,50,000 People Between 60 to 80 Years of Age INR 3,00,000 INR 2,50,000 INR 3,00,000 People Above 80 Years of Age INR 3,00,000 INR 2,50,000 INR 5,00,000 Cha...

Union Budget 2022 did not make any significant changes to the old tax regime and the new, alternative tax structure introduced in 2020. Finance Minister Nirmala Sitharaman emphasised on the importance of stability and predictability, which possibly means that the two regimes are here to stay in their current form for some time. Budget 2022: The real reason why Budget 2022 kept income-tax rates and slabs steady Introduced in Budget 2020, the new income-tax regime offers liberalized tax slabs with lower rates, but with fewer exemptions. The old, co-existing tax regime, is the one that offers various tax benefits such as tax-saver investments under Section 80C, health insurance premiums, house rent allowance (HRA) and so on. To choose between the two, you need to take into account your taxable income and tax breaks that you are eligible for every year. You also need to look at your investment habits, your age, life-stage, goals, responsibilities and likely expenses. Also read: Which tax regime to choose? A five-step guide for you to help you make a choice   Since we are in the midst of the tax-saving season, it is a good time to revisit your tax-saving strategy and ascertain which regime suits you the best, depending on your profile. Salaried in lower tax brackets, claiming fewer tax benefits Now, let’s say your taxable income is Rs 6 lakh and you claim any other deduction such as term insurance premium, EPF contribution and so on under section 80C. In this case, the old...

LinkedIn and 3rd parties use essential and non-essential cookies to provide, secure, analyze and improve our Services, and to show you relevant ads (including professional and job ads) on and off LinkedIn. Learn more in our Select Accept to consent or Reject to decline non-essential cookies for this use. You can update your choices at any time in your The 2023 budget brought with it a revamped income tax regime, giving taxpayers the option to choose between the old and new regimes. While the old regime offers more deductions and exemptions, the new regime boasts lower tax rates. Choosing between the two regimes can be a complex decision that depends on your income level and the total deductions you claim. If you're a salaried individual, chances are you must have received an email from your HR or payroll team asking you to select your income tax regime for the financial year. If you fail to make a choice, the new tax regime will be set as default and can only be changed when filing your tax returns. Here’s how the old tax regime differs from the new and what you must choose as a taxpayer. Lower Tax Rates The new regime has seven tax slabs ranging from 0% to 30%, with the highest tax rate applicable on income above INR 15 lakh. On the other hand, the old regime,offers over 70 exemptions and deductions, including popular ones like HRA, LTA, and Section 80C. Taxpayers can choose which regime works better for their specific financial situation. Higher Tax Rebate Limit Full tax...

While there are merits and demerits of both the old and new regimes, it becomes cumbersome for taxpayers to pick the best-suited tax regime. Here is a simplified assessment of both the regimes to answer a few pertinent questions. 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). 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. 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. In a major boost to the new income tax regime and to make it more pleasing to the middle-class common individual, the government has announced significant changes to the new income tax regime. The basic exemption limit in the new tax regime has been increased to INR 3 lakh, which was INR 2.5 lakh earlier. Also, a tax rebate on income earned up to INR 7 lakh, which was INR 5 lakh earlier under section 87A. It is to be noted that the old tax regime has enough room for claiming deductions against various allowances forming part of salary (eg. HRA, LTA, etc) and also for specified investments/ expenses such as Public Provident Fund (PPF), National Pension Scheme (NPS), repayment of housing loan, payment of tuition fees, ...