1) If you have income up to ₹7 lakh then the new tax regime is better, as there is no tax up to ₹7 lakh and additionally there is a standard deduction of ₹50,000 in the new tax regime. As per the changes proposed in the Budget, no tax would be levied on people with annual income of up to ₹7 lakh under the new tax regime but it made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.
2) In case, you have no deductions to avail then consider going for the new tax regime, as tax rates are lower and there is no deduction available on investments.
3) The taxpayers under the new regime have to forgo exemptions, such as Leave Travel Allowance, House Rent Allowance, Tuition Fee, and interest on housing loans, among others.
4) New income tax slabs
No tax would be levied for income up to ₹3 lakh
Income between ₹3-6 lakh would be taxed at 5 per cent
Income between ₹6-9 lakh would be taxed at 10 per cent
Income between ₹9-12 lakh at 15 per cent
Income between ₹12-15 lakh at 20 per cent
Income of ₹15 lakh and above will be taxed at 30 per cent.
5) Old tax slabs
Income up to ₹2.5 is exempt from taxation under old tax regime.
Income between ₹2.5 to ₹5 lakh is taxed at the rate of 5 per cent under the old tax regime.
Personal income from ₹5 lakh to ₹7.5 lakh is taxed at a rate of 15 per cent under the old regime
Income between ₹7.5 lakh to ₹10 lakh is taxed at a rate of 20 per cent in the old regime
Under the old regime, personal income above ₹10 lakh is taxed at a rate of 30 per cent.
6) New vs old tax regime
While presenting Union Budget 2023 on 1 February, Finance Minister Nirmala Sitharaman said that an individual with an annual income of ₹9 lakh will be required to pay only ₹45,000. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay in the old regime.
An individual with an income of ₹15 lakh would be required to pay only ₹1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of ₹1,87,500 Sitharaman had said.
7) NPS deduction of ₹50,000 is available under the old regime
8) The Income Tax Department has launched a tax calculator . You just need to fill in relevant details, and the calculator will determine which option works better for you.
