Compare Tax under Existing & New Regime - Disclaimer:

Compare Tax under Existing & New Regime

ITR file upload time has arrived. This is the first year of choice, between the old tax regime with deductions and exemptions and the new tax regime with no exemptions and exemptions but with low slab rates, while you are submitting your ITR. Taxpayers are confused about which one to choose. Let's talk more about state symbols.

What the new tax regime provides

The option of a new tax regime is available to all people and HUFs. This can be selected. Under the new state tax is payable at low income levels of up to Rs. 15 lakh compared to the old empire. Under the new regime the slabs tax rates of 5%, 10%, 15%, 20% and 25% apply to each successive growth of Rs. 2.50 lakh from the basic release of Rs. 2.5 lakh up to 15 lakhs of total amount.
If you wish to elect a New tax regime you must renounce the various tax exemptions and exemptions available otherwise under the old regime. Under the new tax regime, low-income earners are not able to get major benefits such as regular deductions, House Rent Allowance (HRA), Leave Travel Assistance (LTA) and other approved grants. Various deductions such as those available under Section 80 C (with various items such as EPF, LIP, School Fees, PPF, NSC, ELSS, home loan repayments etc), 80D (premium insurance health), 80 CCD (1) & 80 CCD (1B) (NPS) will also not be available in both categories of taxpayers i.e. self-employed and self-employed. It also loses interest on mortgage loan claims and initiates or perpetuates losses in respect of disposable property. And you will not be able to set any losses brought forward earning the current income under the new system.
The 2020 budget saw Finance Minister Nirmala Sitharaman announce a new tax regime with more tax slabs and lower tax rates. This past was much sought after by taxpayers, but it came with the arrest of all deductions and exemptions available under the old tax regime.
Adding to the confusion, the finance minister gave taxpayers the opportunity to choose between a new government and an existing one, leaving it up to them to decide what they would prefer. All of these things work together, instead of simplifying tax laws, they are now more complex.
And if you are wondering how you can figure out if you should choose a new or new tax regime, this blog answers that question. We look at the new government in detail, its benefits and compare it with the existing tax system. So let's get started.

Old Tax Regime – High Rates but Lot of Options to Reduce Taxes

The current tax system is complicated to say the least. While tax rates are high, there are many ways to reduce your tax debt.
Over the years the government, by inserting clauses in the Income Tax Act, has given Indian taxpayers more than 70 exemption and deduction options with which they can defer their income and pay less.
While exemptions are part of your income, such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA), deductions allow you to lower your tax rate by investing, saving or using certain items. The largest deduction is 80c where you can deposit your tax-free income at Rs.1.5 lakh. Apart from this, there are a few other categories that allow you to deduct tax deductions on items ranging from your loan interest (home and education) to the premiums you pay for health insurance.

Tax Slabs and Rates under the New Regime

Exemptions are granted to people earning up to Rs. 5 lakh remains the same. Below is a table with old and new tax rates as applicable to annual income:

Things to consider:

• The new values ​​mentioned above are not deducted under the various categories of Chapter VI-A.
• If the taxpayer wants to deduct Rs. 2.5 lakhs (standard deduction of Rs. 50,000, Rs. 1.5 lakhs u / s 80C and investment in NPS of Rs. 50,000), the tax will remain the same as the old one.
• In the event of a dispute over interest on a mortgage loan. Exemption for 2 lakhs or for HRA, the old tax rate would be Rs. Less than 46,800 is the new state.