The Tax regime elaborates tax rates and tax slabs. In the year 2020, the government adopted a new regime that has more tax-saving options but with higher tax rates. The new regime also offers the option of selecting either old or new regimes to taxpayers, which renders the taxation process even more complicated. When deciding what option to go for, you must try approaching it in a systematic manner to avoid unnecessary hassles in figuring it out.
Correspondingly, every taxpayer will relish different tax benefits under the two regimes of taxation. Taxpayers need to be cautious of prioritizing regimes over life goals. For example, you need to decide whether to invest your capital or go for securities or insurance, depending upon your requirements.
The new regime, introduced lately, is different from the old one in two aspects. First, the new regime entails more tax slabs which are accompanied by reduced rates in the sub-Rs Fifteen lakh range. And second, all the deductions and exemptions that were utilized by taxpayers in the current regime shall not be accessible in the new taxation regime.
If a person chooses a new regime, deductions offered in the old regime are not made available. Thus, experts recommend that if the benefit of lower rates outpaces the perks of deductions and exemptions available under the old regime, then the taxpayer should go for the new regime.
Here are the revised income tax slabs under the new regime:
There is no shortcut to answer this question, as taxpayer has to evaluate both the regimes new and old and then decide which one to choose. But keeping in mind about the investment in tax saving instruments, it’s recommended to opt for old tax regime as it offers deduction/exemption.
In order to opt for new regime, individuals with business income have to fill form 10E once in lifetime. Salaried individuals have to fill this form every year.
Businessman, employees, members of HUF who are eligible to pay Income tax must opt for regime whether old or new.
The old regime would be more beneficial if you have invested more than 3,00,000 in tax saving schemes.
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