Comparison Of Old And New Tax Regime Rates For AY 2022-23

New Income Tax Slab Rates introduced in the Budget 2020 for AY 2021-22 onwards is kept optional for the taxpayers, where, they are open to choose the tax slabs of old regime (FY 2021-22). The New Tax Slabs are made common for taxpayers of all age groups with reduced income tax rates allowed in income brackets up to INR 15,00,000. But, it disallows 70 tax exemptions and deductions that are available as reliefs with Old Regime Tax Rates.

 

There is following Income Tax Rate under the New Tax Regime and Old tax Regime:- 

Income tax rate slabs (Rs) Old Regime New Regime Surcharge
Up to 2.50 lakh nil nil Nil
2.50 lakh to 5.00 lakh 5% 5% Nil
5.00 lakh to 7.50 lakh 20% 10% Nil
7.50 lakh to 10.00 lakh 20% 15% Nil
10.00 lakh to 12.50 lakh 30% 20% Nil
12.50 lakh to 15.00 lakh 30% 25% Nil
15.00 lakh to 50.00 lakh 30% 30% Nil
50.00 lakh to 1.00 Cr 30% 30% 10%
1.00 Cr to 2.00 Cr 30% 30% 15%
2.00 Cr to 5.00 Cr 30% 30% 25%
5.00  Cr & above 30% 30% 37%
  • 4% Health and Education Cess is applicable on all the above taxes
  • Rebate of Rs. 12,500 u/s 87A is applicable for tax slabs of both old and new regimes, for taxes on annual income not exceeding Rs. 5.00 lakh.
  • Additional surcharges are levied for super rich with income as given below:

  

We’re giving a comparative study below to show how New Tax Slab Rates can reduce your tax liability, provided you’re ready to skip the allowed deductions of Old Tax Regime:

 

While opting for the new tax slab:-

 

  • Option to be exercised on or before the due date (31 JULY 2022) of filing ITR for F.Y 2021-2022 (AY 2022-2023)
  • Individuals/HUFs having no business income can choose between old and new regime tax slab every year.
  • For those, who are having business income get one time chance to choose their option. Once done, they are to follow the rule every year, unless they cease this source of income.

 

Note:- Common tax deductions for salaried taxpayers allowed in Old Tax Slab Rates (removed in New Tax Regime) are( Check old slabe)

The new tax slab disallows 70 tax exemptions and deductions, such as,

  • Leave Travel concession, ax free if claimed once in block of two years
  • Standard Deduction RS 50000/-
  • House Rent Allowance (HRA), Depends on salary structure and rent paid
  • Interest on housing loan (Section 24) Rs 3.5 lakh for affordable housing, Rs 2 lakh for others
  • Deductions employer’s contribution to NPS u/s 80CCD(2) RS 50000/-
  • Chapter VI-A Deductions of 80C, 80CCC, 80CCD, RS 150,000/-
  • Deductions of 80D, RS 25000/-( (Rs 50,000 for parents and senior citizens)
  • Deductions 80 TTA (Savings bank interest: Rs 10,000)
  • Deductions 80 TTB Interest income (for senior citizens): Rs 50,000
  • Deductions 80 E (Interest paid for eight consecutive years)
  • Deductions 80 DD : (Rs 75,000 to Rs 1.25 lakh depending on disability)
  • Deductions 80 DDB : Rs 40,000 (Rs 1 lakh for senior citizens)
  • 80EE,80EEA,80EEB,
  • Deductions of 80G (50-100%) of the amount donated
  • Deductions 80GG, 80GGA, 80GGC, 80IA,80IAB, 80IAC, 80IB,80IBA,
  • Allowances of MPs/MLAs, and others that were exercised with the tax slabs of old regime.
  • section 80JJAA for new employment are allowed.

 

We’re giving the easy scheme in which you can switch between Old and New Tax Slab Rates, when you wish to make an investment for tax deduction:

 

1. The taxpayers earning up to upto INR 5 lakh come under the rebate of INR 12,500 available in Section 87A and have zero tax liability. So, they are not coming under any available tax deduction.

 

2.For income of upto INR 7.5 lakh, if you have the investment amount of INR 1,25,000 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime.

 

Particulars

Old Regime (In INR)

New Regime (In INR)

Taxable Income

7,50,000

7,50,000

Less Deduction Amount

(1,25,000)

-

Taxable Amount

6,25,000

7,50,000

Tax Calculation

(@20%) 37,500

(@10%)37,500

Note: The calculation is shown excluding the CESS amount.

 

3.For income of upto INR 10 lakh, if you have the investment amount of INR 1,87,500 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime.

 

 

Particulars

Old Regime (In INR)

New Regime (In INR)

Taxable Income

10,00,000

10,00,000

Less Deduction Amount

(1,87,500)

-

Taxable Amount

8,12,500

10,00,000

Tax Calculation

(@20%) 75,000

(@15%) 75,000

Note: The calculation is shown excluding the CESS amount.

 

4.For income of INR 12.5 lakh, if you have the investment amount of INR 2,10,000 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime.

 

  • For income of INR 15 lakh, if you have the investment amount of INR 2,50,000 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime. Income above INR 15 lakh is taxable @30% in both the Tax Slab Rates and can be switched based on your investment planning accordingly.

 

FILING FOR INCOME TAX RETURN F.Y 2020-21(A.Y. 2021-2022)

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