Comparing ITR: Old Regime vs. New Regime 🇮🇳💸

Income Tax Savings

Comparing ITR: Old Regime vs. New Regime 🇮🇳💸

Since April 1, 2020, India’s tax system has undergone a significant transformation, offering taxpayers the option to choose between the old and new tax regimes. Each regime has its own set of advantages and limitations. Let’s dive into the details to help you make an informed decision.

Key Highlights

🔍 New Tax Regime:

  • Lower Tax Rates: Introduced from FY 2020-21 with reduced tax rates.
  • Limited Exemptions: Includes exemptions like HRA, LTA, and sections 80C and 80D.
  • Budget 2023 Adjustments: Five major changes, including an increased tax rebate up to ₹7 lakhs.
  • Simplified Tax Slabs: Higher exemption limits for simplicity.

🔄 Old Tax Regime:

  • Existing System: Offers over 70 exemptions.
  • Benefits: Includes exemptions like HRA, LTA, and 80C deductions.
  • Flexibility: Taxpayers can choose between the old and new regimes.
  • Exemptions List: Detailed exemptions available.

Example Scenario

  • Income: ₹8,00,000
  • Old Regime Tax: ₹65,000
  • New Regime Tax: ₹31,200

Estimates to Consider:

  • The new regime is advantageous when deductions are less than ₹1.5 lakhs.
  • The old regime is beneficial when deductions exceed ₹3.75 lakhs.

Conclusion

Both regimes have their pros and cons. The old regime encourages savings with numerous exemptions, while the new regime simplifies tax filing but offers fewer deductions. The choice between the two depends on your unique financial situation and deduction eligibility.

For a detailed breakdown of tax slabs, deductions, and practical examples, visit Dealgini.com. Make an informed decision based on your financial goals! 🧐💡

About the Author

You may also like these