Income Tax: Choose Old Regime or New Regime? Where is the benefit, know everything here – what to choose in income tax new tax regime or old tax regime

Zero tax on how much income in old?

In the budget proposal for the year 2023-24 itself, the central government has increased the tax rebate in the new tax regime. Now this limit has been increased to two lakh rupees. Meaning that now if a tax payer chooses the new tax regime, he will not have to pay any income tax on annual income up to Rs 7 lakh instead of Rs 5 lakh. Along with this, salaried will also get the benefit of standard deduction of Rs.50,000 (Rs.50,000 Standard Deduction In New Tax Regime) in the new tax regime from this year itself. In this way, those whose total annual income is Rs 7.5 lakh will become tax free by opting for the new tax regime.

Zero tax on how much income in old tax regime

The annual income limit to be exempted from income tax in the old tax regime is only Rs 5.50 lakh (Tax Rebate In Old Tax Regime). If a tax payer opts for the old tax regime and avails deductions under various sections of income tax. And brings his taxable income up to Rs 5.50 lakh, then his income tax will be zero. No change was made in the old tax system in this budget.

old tax regime vs new tax regime

The central government has made a provision to promote the new tax regime in the current year’s budget. To make it attractive, the gift of standard deduction has been given. Also, the tax rebate limit has been increased to Rs 2 lakh. The old regime was left as it was. In such a situation, the question arises whether the new tax regime is better? Should the old system be bid bye? There cannot be a simple answer to this. Because, under the old tax regime, from 80C to various provisions of the Income Tax Act, the amount of investment will decide whether the new tax regime is appropriate for a particular taxpayer or the old one. It is necessary that the more the provisions of the Income Tax Act giving tax exemption are used to the maximum extent, the more beneficial the old tax regime will be in comparison to the new tax regime. For example, if a person invests a significant portion of his income in tax saving instruments (Tax Saving Investments), then he will benefit from the old system. If someone runs away from investment, then the new system will be right for them.

Pay the children’s fees, which is better if you have a home loan

If a salaried person has two children and pays school fees of around Rs 20,000 every month. So the old system is fine for them. Similarly, if a person has taken a home loan. So the old system is fine for them too. In this, they will get exemption on the payment of both Home Loan Interest Payment and Principal Repayment. Similarly, if a person has taken separate health insurance for his old parents, then they will also get more benefit from the old system.

earn 7.5 lakhs no investment so which one is fine

If someone’s annual income is up to Rs 7.50 lakh. He does not invest a single penny. There is no liability as of now. If such persons opt for the new tax regime, then they will not have to pay a single paisa income tax. However, they will have to invest at least Rs 2 lakh to be taxed zero in the old regime. Generally, for a person with an annual salary of Rs 7.50 lakh, it is a bit difficult to invest Rs 2 lakh in a year.

A look at the slabs of the old and new tax regime

Old Tax Regime – (For those below 60 years of age)

New Tax Regime (for all age groups)

Go to the New Regime or Stay in the Old?

The Yaksha question is again in front of you. Is it beneficial to move to the new tax regime or stick to the old regime? The answer depends on your income, your investment habits and your expenses. If you are used to saving. If you use various tax saving instruments under the Income Tax Act, then definitely the old system is better for you. But if you consider all these as useless work, then it will be good for you to come in the new tax system. If you are still confused, then it would be better to take the help of a tax advisor or financial advisor.