Income tax
With the beginning of the new financial year, income taxpayers will need to choose the option of new and old tax system. In such a situation, with the increase in exemption limit in the new tax system, it is important to know which system of tax is better for them. Vivek Jalan, a partner at the Consultation Company Tax Connect Advisory Services LLP, says that the new tax system is appropriate for taxpayers with annual income annual income of Rs 12 lakh (for salaried persons), but the old tax system is going to save more for income with more than 12 lakhs and up to 15 lakhs. However, it will depend on how much taxpayers save.
Right for those doing tax deduction drugs
He also said that the old tax system will be beneficial only when the taxpayer is in a position to claim a cut of about 5.5 lakh rupees. However, if the total annual income does not exceed about Rs 15,00,000, then only the deduction of about 5.5 lakhs will be available. The new tax system will be suitable for more annual income than this. A discount of five and a half lakh rupees includes Rs 1.5 lakh under Section 80C of the Income Tax Act, two lakh rupees for housing loan interest under Section 24 (B) and about two lakh rupees under other deductions like Section 80D (Medical Insurance), 80G (Eligible Institutions), 80E (interest on education loan) etc.
New tax system discounts up to Rs 12 lakh
Finance Minister Nirmala Sitharaman announced a huge relief to the middle class in the budget of 2025-26 and announced a complete income from income tax of Rs 12 lakh (now with a standard deduction of Rs 75,000 for salaried taxpayers with a standard deduction of Rs 12.75 lakh). Income tax exemption will be given to income tax payers who opt for the new tax system. Jalan said, “If the taxpayer does not have any tax plan or eligible deduction, the new system will usually be more beneficial. In addition, even though the taxpayer has planned to avoid tax liability, the old tax system will be beneficial only when the taxpayer is in a position to claim a deduction of about Rs 5.5 lakh. “He also said,” In case of deduction of less than 5.5 lakhs, the new system will be beneficial in most cases.
Old tax system beneficial only for savings
If any taxpayers claim to be reduced by annual savings and investment, then the old tax system can be beneficial for it. That too only when the annual income does not exceed Rs 15,00,000. ”If the tax is made basic comparison between the old and new arrangements with a deduction of about 5.5 lakhs, the old tax system on the annual income of Rs 13 lakh will be listed with standard deduction and four percent cess on the annual income of Rs 54,600, while it will be Rs 66,300 in the new tax system. At the same time, in case of annual income of Rs 14 lakh, a tax liability of Rs 75,400 will be made with four percent cess in the old tax system, while in the new system it will be Rs 81,900. Similarly, in the case of 15 lakh annual income, the tax liability will be Rs 96,200 in the old tax system and Rs 97,500 in the new.
New for those with more than 16 lakh income
In the old tax system for Rs 16 lakh, tax liability will be seated Rs 1,17,000 while in the new system, Rs 1,13,100 will be seated. At the same time, on the annual income of Rs 13 lakh without standard deduction, the old tax system will be Rs 65,000 in the new system and Rs 78,000 in the new system. At the same time, in the case of Rs 14 lakh, it will sit 85,800 and 93,600 rupees respectively. The tax liability will be seated Rs 1,06,600 in the old tax system on income of Rs 15 lakh annually and Rs 1,09,200 in the new system. The tax liability will be Rs 1,32,600 in the old tax system and Rs 1,24,800 in the new system. There is no tax on annual income of four lakh rupees in the new tax system. Five percent on four to eight lakh rupees, 10 percent on eight to 12 lakh rupees, 15 percent on 12 lakh to 16 lakh rupees, 20 percent on 16 to 20 lakh rupees, 25 percent on Rs 20 lakh to 24 lakhs and 30 percent on annual income above 24 lakh rupees.
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