FY 2024-25 The last date for filing income tax for (assessment year 2025-26) is July 31, 2024. Many taxpayers have now got Form-16. After this they are preparing to file their income tax returns. However, many taxpayers are confused about the old and new tax regime. Let us tell you that the government had implemented a new tax system, Section 115BAC, as an alternative option to the old tax system from April 1, 2020 (financial year 2020-21). If you are also confused about these two tax regimes, then there is no need to worry. We are clearing your confusion.
New tax regime
With revised tax slabs and concessional tax rates, the new tax regime applies equally to all categories of taxpayers including individuals, HUFs and Association of Persons (AOPs). The current rules stipulate that if taxpayers fail to declare their preference with their employer, the deductions will be processed as per the new tax regime. That is, if you fail to choose the old tax regime, the new tax regime will be adopted by default. However, the new tax regime does not offer the benefit of exemptions like HRA, LTA, Section 80C, 80D, etc.
Income and tax exemption limit in the new tax regime
- Income up to Rs 3 lakh: Nil tax
- Rs 3 lakh to Rs 6 lakh: 5% tax on income above Rs 3,00,000
- Income between Rs 6 lakh and Rs 9 lakh: Rs 15,000 + 10% tax on income above Rs 6,00,000
- Income between Rs 9 lakh and Rs 12 lakh: Rs 45,000 + 15% tax on income above Rs 9,00,000
- Income between Rs 12 lakh and Rs 15 lakh: Rs 90,000 + 20% tax on income above Rs 12,00,000
- Income above Rs 15 lakh: Rs 150,000 + 30% tax on income above Rs 15,00,000
List of New Tax Regime Exemptions
> Transport Allowances in respect of Persons with Disabilities (PwD)
> Conveyance Allowance
> Travel/Excursion/Transfer Compensation
> Exemption under section 10(10C) for voluntary retirement scheme
> Gratuity amount under section 10(10)
> Leave encashment under section 10(10AA)
> Deduction on amount deposited in Agniveer Corpus Fund under section 80CCH(2)
Old tax regime
The old tax regime offers several deductions to individuals. This includes House Rent Allowance (HRA), Leave Travel Allowance (LTA), deductions under sections 80C, 80D, 80CCD(1b), 80CCD(2) and others.
> Under the old tax regime, income up to Rs 2.5 lakh was exempted from tax.
> Under the old tax regime, income between Rs 2.5 lakh and Rs 5 lakh was taxed at the rate of 5%.
> In the old system, personal income from Rs 5 lakh to Rs 10 lakh is taxed at the rate of 20%
> Under the old system, personal income above Rs 10 lakh was taxed at the rate of 30%.
Latest Business News