The current financial year budget made a big change for an assessee by bringing in the New tax regime as a voluntary compliance for all the taxpayers. Although an individual can make a choice to switch to the old tax regime if they want. There are advantages and disadvantages of both the old tax regime as well as the new tax regime but it can be confusing for a taxpayer to select the best suited regime for themselves. Let’s check out the various factors to be considered in the old tax regime and the new tax regime in the FY 2023-24.
Under The New Tax Regime
The New tax regime has increased the range of taxation slab rates from 0% to 30% with the lowest exemption till Rs 3 lakhs and the highest tax rate of 30 % is applicable from Rs.15 lakhs. The new Income tax slab rates are given below-
INCOME TAX SLAB RATES IN THE NEW TAX REGIME 2023-24
| ANNUAL INCOME | NEW TAX REGIME |
| 0-3 Lakhs | Nil |
| 3-6 Lakhs | 5% |
| 6-9 Lakhs | 10% |
| 9-12 Lakhs | 15% |
| 12-15 Lakhs | 20% |
| Above 15 Lakhs | 30% |
Important Highlights For New Tax Regime 2023-24
1. The new tax regime is a voluntary compliance for the year 2023-24.
2. An individual earning Rs. 7 lakh annually is entitled to a rebate.
3. Highest surcharge rate on income above Rs. 5 crore has been reduced from 37% to 25%.
4. To ease the complex paperwork and reduce the cumbersome process of compliance and management by the taxpayers and the tax authorities in regards to the deductions and exemptions,there are a lot of deductions forgone.
5. A few tax deductions which are not allowed under the new tax regime are
A. Leave Travel allowance
B. House rent allowance
C. Children Education allowance
D. Deduction for professional tax
E. Interest on housing loans
F. Deduction for specified
6. No compulsory rules and regulations regarding your investments under the new tax regime.
Comparison Between Old Tax Regime and New Tax Regime
As announced in the capex heavy budget of the FY 2023-24,the new tax regime is set by default but still an individual can make a choice between the old tax regime and the new tax regime if they desire. If you want to claim deductions and exemptions then the old tax regime will be more beneficial otherwise the new tax regime has many levels of income slabs and rates.
The important point to understand here is in which tax regime you are able to take more money back home.
Let us take an example to understand the situation in both the lights, Mr.Valmiki is earning Rs. 50,00,000 annually. He claims deduction under Section 80 C against LIC and EPF for Rs. 1,50,000. He has taken health insurance for which he pays a premium for 25,000 which he claims as tax deductible under section 80 D. He also claims tax free Leave travel allowance for Rs.38,000 and House rent allowance of Rs. 1,60,000. Let us calculate tax payable in both the circumstances.
