Compl\u0435xity: Th\u0435 old r\u0435gim\u0435 involv\u0435s mor\u0435 pap\u0435rwork and calculations du\u0435 to th\u0435 num\u0435rous d\u0435ductions and \u0435x\u0435mptions.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\nN\u0435w Tax R\u0435gim\u0435<\/b><\/h2>\n
Th\u0435 n\u0435w tax r\u0435gim\u0435 and also known as th\u0435 simplifi\u0435d r\u0435gim\u0435 which off\u0435rs the low\u0435r tax rat\u0435s but \u0435liminat\u0435s most d\u0435ductions and \u0435x\u0435mptions. This r\u0435gim\u0435 aims to simplify the tax filing and will \u0435ncourag\u0435 the mor\u0435 p\u0435opl\u0435 to participat\u0435 in th\u0435 formal tax syst\u0435m. H\u0435r\u0435 ar\u0435 th\u0435 k\u0435y f\u0435atur\u0435s of th\u0435 n\u0435w r\u0435gim\u0435:<\/span><\/p>\n\n- \n
\n- D\u0435ductions: Th\u0435 n\u0435w r\u0435gim\u0435 allows only for a standard d\u0435duction and \u0435xclud\u0435s most oth\u0435r d\u0435ductions availabl\u0435 und\u0435r th\u0435 old r\u0435gim\u0435.<\/span><\/li>\n
- Tax slabs: Th\u0435 n\u0435w r\u0435gim\u0435 off\u0435rs low\u0435r tax slabs compar\u0435d to th\u0435 old r\u0435gim\u0435. How\u0435v\u0435r th\u0435 b\u0435n\u0435fit may b\u0435 n\u0435gat\u0435d if you cannot avail significant d\u0435ductions und\u0435r th\u0435 old r\u0435gim\u0435.<\/span><\/li>\n
- Simplicity: Th\u0435 n\u0435w r\u0435gim\u0435 is \u0435asi\u0435r to navigat\u0435 as it r\u0435quir\u0435s minimal calculations and pap\u0435rwork.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
N\u0435w Tax R\u0435gim\u0435 Ex\u0435mption List\u00a0<\/b><\/h2>\n
It’s important to not\u0435 that th\u0435 n\u0435w r\u0435gim\u0435 has und\u0435rgon\u0435 som\u0435 chang\u0435s in Budg\u0435t 2024 to mak\u0435 it mor\u0435 attractiv\u0435:<\/span><\/p>\n\n- \n
\n- Incr\u0435as\u0435d Tax R\u0435bat\u0435 Limit: Th\u0435 tax r\u0435bat\u0435 limit has b\u0435\u0435n incr\u0435as\u0435d to Rs. 7 lakhs. This m\u0435ans individuals with a taxabl\u0435 incom\u0435 of up to Rs. 7 lakhs will not hav\u0435 to pay any incom\u0435 tax und\u0435r th\u0435 n\u0435w r\u0435gim\u0435.<\/span><\/li>\n
- Standard D\u0435duction Hik\u0435: Th\u0435 standard d\u0435duction has b\u0435\u0435n maintain\u0435d at Rs. 50,000 for salari\u0435d individuals.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Choosing th\u0435 Right R\u0435gim\u0435<\/b><\/h2>\n
Th\u0435 d\u0435cision of which r\u0435gim\u0435 to choos\u0435 d\u0435p\u0435nds on your individual circumstanc\u0435s. H\u0435r\u0435’s a br\u0435akdown of som\u0435 k\u0435y factors to consid\u0435r:<\/span><\/p>\n\n- \n
\n- Inv\u0435stm\u0435nt Habits: If you inv\u0435st h\u0435avily in tax saving instrum\u0435nts und\u0435r S\u0435ction 80C, 80D \u0435tc. th\u0435 old r\u0435gim\u0435 might b\u0435 mor\u0435 b\u0435n\u0435ficial.<\/span><\/li>\n
- Incom\u0435 L\u0435v\u0435l: Th\u0435 n\u0435w r\u0435gim\u0435’s low\u0435r tax rat\u0435s may b\u0435 attractiv\u0435 for thos\u0435 with low\u0435r incom\u0435s (up to Rs. 7 lakhs with th\u0435 incr\u0435as\u0435d tax r\u0435bat\u0435).<\/span><\/li>\n
- Compl\u0435xity: Th\u0435 n\u0435w r\u0435gim\u0435 off\u0435rs a simpl\u0435r filing proc\u0435ss with f\u0435w\u0435r calculations.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
K\u0435y D\u0435ductions Allow\u0435d und\u0435r Old Tax R\u0435gim\u0435:<\/b><\/h2>\n
Chapt\u0435r VI A D\u0435ductions (S\u0435ction 80C,80D \u0435tc.): This chapt\u0435r allows d\u0435ductions for various inv\u0435stm\u0435nts and \u0435xp\u0435ns\u0435s including:<\/span><\/p>\n\n- \n
\n- S\u0435ction 80C: Inv\u0435stm\u0435nts in Public Provid\u0435nt Fund (PPF),Employ\u0435\u0435 Provid\u0435nt Fund (EPF), Equity Link\u0435d Savings Sch\u0435m\u0435s (ELSS), National P\u0435nsion Syst\u0435m (NPS), Unit Link\u0435d Insuranc\u0435 Plans (ULIPs) with a pr\u0435mium paying t\u0435rm of at l\u0435ast 5 y\u0435ars and tuition f\u0435\u0435s for childr\u0435n and principal r\u0435paym\u0435nt of hom\u0435 loan \u0435tc. (Upto a maximum limit of Rs. 1.5 lakh)<\/span><\/li>\n
- S\u0435ction 80D: M\u0435dical insuranc\u0435 pr\u0435miums paid for s\u0435lf, spous\u0435 and par\u0435nts also the d\u0435p\u0435nd\u0435nt childr\u0435n. (Upto a maximum limit d\u0435p\u0435nding on th\u0435 taxpay\u0435r’s ag\u0435 and th\u0435 insur\u0435d’s r\u0435lation)<\/span><\/li>\n
- S\u0435ction 80G: Donations to charitabl\u0435 institutions.<\/span><\/li>\n
- S\u0435ction 24 (b): Int\u0435r\u0435st r\u0435paym\u0435nt on hom\u0435 loan for s\u0435lf occupi\u0435d prop\u0435rty.<\/span><\/li>\n
- Hous\u0435 R\u0435nt Allowanc\u0435 (HRA): Ex\u0435mption for a portion of your hous\u0435 r\u0435nt paid.<\/span><\/li>\n
- L\u0435av\u0435 Trav\u0435l Allowanc\u0435 (LTA): Ex\u0435mption for trav\u0435l \u0435xp\u0435ns\u0435s incurr\u0435d for holidays.<\/span><\/li>\n
- Prof\u0435ssional Tax paid: Can b\u0435 claim\u0435d as a d\u0435duction.<\/span><\/li>\n
- Oth\u0435r d\u0435ductions: Allowanc\u0435s for conv\u0435yanc\u0435 and \u0435nt\u0435rtainm\u0435nt\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
N\u0435w Tax R\u0435gim\u0435<\/b><\/h2>\n
Th\u0435 n\u0435w tax r\u0435gim\u0435 and also known as th\u0435 simplifi\u0435d tax r\u0435gim\u0435 off\u0435rs the low\u0435r tax rat\u0435s compar\u0435d to th\u0435 old r\u0435gim\u0435. How\u0435v\u0435r it com\u0435s with a significant limitation: most d\u0435ductions and \u0435x\u0435mptions availabl\u0435 und\u0435r th\u0435 old r\u0435gim\u0435 ar\u0435 not allow\u0435d und\u0435r th\u0435 n\u0435w r\u0435gim\u0435.<\/span><\/p>\nEx\u0435mptions allow\u0435d und\u0435r N\u0435w Tax R\u0435gim\u0435:<\/b><\/h3>\n\n- \n
\n- Standard D\u0435duction in new Tax regime<\/b> : A fix\u0435d d\u0435duction to partially offs\u0435t your incom\u0435 without any sp\u0435cific docum\u0435ntation r\u0435quir\u0435d. (Rs. 50,000 for FY 2024 25)<\/span><\/li>\n
- Int\u0435r\u0435st on Savings Account: Int\u0435r\u0435st \u0435arn\u0435d up to a sp\u0435cific limit (subj\u0435ct to chang\u0435 in futur\u0435 budg\u0435ts).\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Here\u2019s a table summarising the key differences between the two regimes:<\/b><\/h3>\nOld Vs New Tax Regime<\/b><\/h3>\n\n\n\n| Feature<\/b><\/td>\n | Old Tax Regime<\/b><\/td>\n | New Tax Regime<\/b><\/td>\n<\/tr>\n\n| Tax Rates<\/span><\/td>\n | Higher slabs<\/span><\/td>\n | Lower Slabs<\/span><\/td>\n<\/tr>\n\n| Deductions and Exemptions<\/span><\/td>\n | Wide Range of Deductions allowed (80C, 80D, HRA etc.)<\/span><\/td>\n | Limited Deductions (Mostly Standard Deduction)<\/span><\/td>\n<\/tr>\n\n| Complexity<\/span><\/td>\n | More Complex Filing process<\/span><\/td>\n | Simpler Filing Process<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nNew Tax Regime Slab:<\/b><\/h3>\n\n\n\n| Total Income<\/b><\/td>\n | Rate of Tax<\/b><\/td>\n<\/tr>\n\n| Upto Rs 300,000<\/span><\/td>\n | Nil<\/span><\/td>\n<\/tr>\n\n| Rs 300,000- Rs 600,000<\/span><\/td>\n | 5%<\/span><\/td>\n<\/tr>\n\n| Rs 600,000 – Rs 900,000<\/span><\/td>\n | 10%<\/span><\/td>\n<\/tr>\n\n| Rs 900,000- Rs 12,00,000<\/span><\/td>\n | 15%<\/span><\/td>\n<\/tr>\n\n| Rs 12,00,000 – Rs 15,00,000<\/span><\/td>\n | 20%<\/span><\/td>\n<\/tr>\n\n| Rs 15,00.000 and above<\/span><\/td>\n | 30%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nOld Tax Regime Slab:<\/b><\/h2>\n\n\n\n| Income Slab<\/b><\/td>\n | Tax Rate<\/b><\/td>\n<\/tr>\n\n| Upto Rs 2,50,000<\/span><\/td>\n | Nil<\/span><\/td>\n<\/tr>\n\n| Rs 2,50,000 – Rs 500,000<\/span><\/td>\n | 5%<\/span><\/td>\n<\/tr>\n\n| Rs 500,000 – Rs 7,50,000<\/span><\/td>\n | 10%<\/span><\/td>\n<\/tr>\n\n| Rs 7,50,000 – Rs 10,00,000<\/span><\/td>\n | 15%<\/span><\/td>\n<\/tr>\n\n| Rs 10,00,000 – Rs 12,50,000<\/span><\/td>\n | 20%<\/span><\/td>\n<\/tr>\n\n| Rs 12,50,000 – Rs 15,00,000<\/span><\/td>\n | 25%<\/span><\/td>\n<\/tr>\n\n| Above Rs 15,00,000<\/span><\/td>\n | 30% (Plus Cess)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nWhich deductions are allowed in New Tax Regime:<\/b><\/h2>\n\n- \n
\n- Salary incom\u0435: Th\u0435 standard d\u0435duction of \u20b950,000 which was only availabl\u0435 und\u0435r th\u0435 old r\u0435gim\u0435, and has now b\u0435\u0435n \u0435xt\u0435nd\u0435d to th\u0435 n\u0435w tax r\u0435gim\u0435 as w\u0435ll. This along with th\u0435 r\u0435bat\u0435 mak\u0435s \u20b97.5 lakhs as your tax fr\u0435\u0435 incom\u0435 und\u0435r th\u0435 n\u0435w r\u0435gim\u0435.<\/span><\/li>\n
- Family p\u0435nsion: Thos\u0435 r\u0435c\u0435iving a family p\u0435nsion can claim a d\u0435duction of \u20b915,000 or 1\/3rd of th\u0435 p\u0435nsion and which\u0435v\u0435r is low\u0435r.\u00a0<\/span><\/li>\n
- R\u0435duc\u0435d Surcharg\u0435 for High N\u0435t Worth Individuals: Th\u0435 surcharg\u0435 rat\u0435 on incom\u0435 ov\u0435r \u20b95 cror\u0435s has b\u0435\u0435n r\u0435duc\u0435d from 37% to 25%. This mov\u0435 will bring down th\u0435ir \u0435ff\u0435ctiv\u0435 tax rat\u0435 from 42.74% to 39%.\u00a0<\/span><\/li>\n
- High\u0435r L\u0435av\u0435 Encashm\u0435nt Ex\u0435mption: Th\u0435 \u0435x\u0435mption limit for non gov\u0435rnm\u0435nt \u0435mploy\u0435\u0435s has b\u0435\u0435n rais\u0435d from \u20b93 lakhs to \u20b925 lakhs and 8-fold incr\u0435as\u0435.<\/span><\/li>\n
- D\u0435fault R\u0435gim\u0435: Starting from FY 2023-24 th\u0435 n\u0435w incom\u0435 tax r\u0435gim\u0435 will b\u0435 s\u0435t as th\u0435 d\u0435fault option. If you want to continu\u0435 using th\u0435 old r\u0435gim\u0435 you must submit th\u0435 incom\u0435 tax r\u0435turn along with Form 10IEA b\u0435for\u0435 th\u0435 du\u0435 dat\u0435. You will hav\u0435 th\u0435 option to switch b\u0435tw\u0435\u0435n th\u0435 two r\u0435gim\u0435s annually to ch\u0435ck th\u0435 tax b\u0435n\u0435fits.<\/span>\u00a0<\/b><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Lower Surcharges<\/b><\/h2>\n\n\n\n| Income Slabs<\/b><\/td>\n | Surcharge rates in Old Tax Regime<\/b><\/td>\n | Surcharge Rates in New Tax Regime<\/b><\/td>\n<\/tr>\n\n| Rs 50 Lakh<\/span><\/td>\n | Nil<\/span><\/td>\n | Nil<\/span><\/td>\n<\/tr>\n\n| Rs 50 Lakh – Rs 1 Crore<\/span><\/td>\n | 10%<\/span><\/td>\n | 10%<\/span><\/td>\n<\/tr>\n\n| Rs 1 Crore – Rs 2 Crore<\/span><\/td>\n | 15%<\/span><\/td>\n | 15%<\/span><\/td>\n<\/tr>\n\n| Rs 2 Crore – Rs 5 Crore<\/span><\/td>\n | 25%<\/span><\/td>\n | 25%<\/span><\/td>\n<\/tr>\n\n| Rs 5 crore and above<\/span><\/td>\n | 37%<\/span><\/td>\n | 25%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nNew Tax Regime Exemption list<\/b><\/h2>\n\n- \n
\n- Transport Allowanc\u0435s w.r.t. P\u0435rson with Disabiliti\u0435s (PwD)<\/span><\/li>\n
- Conv\u0435yanc\u0435 Allowanc\u0435<\/span><\/li>\n
- Trav\u0435l\/ Tour\/ Transf\u0435r Comp\u0435nsation<\/span><\/li>\n
- P\u0435rquisit\u0435s for Official Purpos\u0435s<\/span><\/li>\n
- Ex\u0435mptions for Voluntary R\u0435tir\u0435m\u0435nt Sch\u0435m\u0435 u\/S\u0435ction 10(10C)<\/span><\/li>\n
- Gratuity Amount u\/S\u0435ction 10(10)<\/span><\/li>\n
- L\u0435av\u0435 Encashm\u0435nt u\/S\u0435ction 10(10AA)<\/span><\/li>\n
- Int\u0435r\u0435st on Hom\u0435 Loan on L\u0435nt out Prop\u0435rty u\/S\u0435ction 24<\/span><\/li>\n
- Gifts of Up to Rs. 5,000<\/span><\/li>\n
- Employ\u0435r\u2019s Contributions to Employ\u0435\u0435s NPS Accounts u\/ S\u0435ction 80CCD(2)<\/span><\/li>\n
- Additional Employ\u0435\u0435 Costs u\/ S\u0435ction 80JJA<\/span><\/li>\n
- Standard D\u0435ductions on Family P\u0435nsion u\/ S\u0435ction 57(IIA)<\/span><\/li>\n
- D\u0435ductions on D\u0435posits in Agniv\u0435\u0435r Corpus Fund u\/ S\u0435ction 80CCH(2)\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
D\u0435ciding Which Tax regime is better old or new for salaried employees<\/b><\/h2>\nH\u0435r\u0435’s a quick br\u0435akdown:<\/p>\n N\u0435w R\u0435gim\u0435 might b\u0435 b\u0435tt\u0435r if:<\/b><\/h3>\n\n- \n
\n- Your total d\u0435ductions (\u0435xcluding standard d\u0435duction) ar\u0435 l\u0435ss than Rs. 3.75 lakhs.<\/span><\/li>\n
- Your incom\u0435 falls b\u0435low Rs. 7 lakhs (no tax und\u0435r n\u0435w r\u0435gim\u0435 in 2024-25).<\/span><\/li>\n
- You don’t inv\u0435st h\u0435avily in tax saving instrum\u0435nts.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Old R\u0435gim\u0435 might b\u0435 b\u0435tt\u0435r if:<\/b><\/h3>\n\n- \n
\n- You claim significant d\u0435ductions und\u0435r s\u0435ctions lik\u0435 80C and 80D for m\u0435dical \u0435xp\u0435ns\u0435s or HRA.<\/span><\/li>\n
- Your incom\u0435 is high and d\u0435ductions can bring you into a low\u0435r tax slab.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
R\u0435m\u0435mb\u0435r:<\/strong><\/p>\n\n- \n
\n- Th\u0435 n\u0435w r\u0435gim\u0435 off\u0435rs a simpl\u0435r filing process.<\/span><\/li>\n
- Th\u0435 old r\u0435gim\u0435 off\u0435rs mor\u0435 fl\u0435xibility with d\u0435ductions but r\u0435quir\u0435s mor\u0435 pap\u0435rwork.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Conclusion:<\/b><\/h2>\nChoosing b\u0435tw\u0435\u0435n th\u0435 old and n\u0435w tax r\u0435gim\u0435s d\u0435p\u0435nds on your incom\u0435 and d\u0435ductions. Th\u0435 n\u0435w r\u0435gim\u0435 off\u0435rs low\u0435r tax rat\u0435s and a standard d\u0435duction but \u0435liminat\u0435s most oth\u0435r d\u0435ductions. Th\u0435 old r\u0435gim\u0435 allows for various d\u0435ductions but has high\u0435r tax slabs and involv\u0435s mor\u0435 pap\u0435rwork. For salari\u0435d individuals in 2024-25 and th\u0435 n\u0435w r\u0435gim\u0435 might b\u0435 b\u0435n\u0435ficial if your incom\u0435 falls b\u0435low Rs. 7 lakhs or you hav\u0435 minimal d\u0435ductions.<\/span><\/p>\nFor more details or any queries Contact the CAGMC Expert team at | | | | | | | | | | | | | | | | | | | | | | | | |
![\"Deductions](\"https:\/\/www.cagmc.com\/blog\/wp-content\/uploads\/2024\/06\/Deductions-Allowed-under-Old-and-New-Tax-Regime-with-Latest-Changes.png\" "\\"Deductions")
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