Brief comparison between New Tax Regime and Old Tax Regime; FY 2023-24 | AY 2024-25:

A brief comparison between New Tax Regime and Old Tax Regime; FY 2023-24 | AY 2024-25 Now is the time when many of the taxpayers; specially salaried individuals are required to choose whether to opt for the New Tax Regime or continue with the old tax regime. Through this article, author would like to help them with the decision-making process. There is no Change in the Slab Rates for Old Tax Regime. For 0 - 2.5 Lakhs of Income, there is No Tax, For 2.5 - 5 Lakhs of Income Tax Rate is 5%, For 5 - 10 Lakhs of the Income tax rate is 20%, Tax Rate is 30% for income above 10 Lakhs. For Senior citizens (60 Years or More) income of up to Rs. 3 Lakhs is exempt from Tax and for super Senior citizens (80 Years or More) income of up to Rs. 5 Lakhs is exempt from Tax. The new Slab for New Tax Regime notified by Finance Act 2023 is for 0 - 3 Lakhs of Income, there is No Tax, For 3 - 6 Lakhs of Income Tax Rate is 5%, For 6 - 9 Lakhs of the Income tax rate is 10%, For 9 - 12 Lakhs of the Income tax rate is 15%, For 12 - 15 Lakhs of the Income tax rate is 20%, Tax Rate is 30% for income above 15 Lakhs. Standard Deduction for Salaried Taxpayer of Rs. 50000 is continued for Old Tax Regime and the same has been introduced in New Tax Regime as well. New Tax Regime is now the Default Regime and Taxpayer needs to opt for Old Tax Regime if he wants to continue with Old Tax Rates. Rebate is available in New Tax Regime for Income up to Rs. 7 Lakhs. In Old Tax Regime it is the same as Rs. 5 Lakhs. The New Tax regime also has the Concept of Marginal Relief (Related to Rebate). If a taxpayer opts for the new tax regime exemptions such as Leave Travel Allowance (LTA), House Rent Allowance (HRA), Children Education Allowance, Deduction for professional tax, Interest on housing loans and deductions on specified investments, etc will not be allowed. However, interest paid on a housing loan taken for a rented-out property can be claimed as a deduction under section 24(b) in the new tax regime as well. But, It is important to note that the deduction for interest paid on housing loans taken for a self-occupied property is not available under the new tax regime. Under the new tax regime, taxpayers can claim the benefit of employer contributions to their National Pension System (NPS) account under section 80CCD(2) of the Income Tax Act. This deduction is restricted to the employer's contribution to NPS made for the benefit of the employee, up to 10 percent of the employee's salary (Basic + DA). A taxpayer opting for new tax time is required to forgo various deductions under sections 80C, 80D, 80G, 80TTA/80TTB and 80E. However Voluntary retirement exemption, Gratuity exemption, Leave encashment exemption is available under new tax regime.   [caption id="attachment_211892" align="alignnone" width="896"] Brief comparison between New Tax Regime and Old Tax Regime; FY 2023-24 | AY 2024-25[/caption]