Great News for Income Taxpayers; 6 Important Exemptions will be given on filling ITR Form

While presenting the Union Budget on 1st, February 2023, Finance Minister Nirmala Sitharaman had announced changes in personal income tax. Nirmala Sitharaman had announced that the new taxation system imposed by the government would be in default from the financial year 2023-24.

Under the new system, tax exemption can be obtained on income of Rs.7 lakh annually. Taxpayers with annual income up to Rs.7 lakh will save Rs.33,800 in taxes after increasing the exemption under the new income tax regime through the Finance Minister.

Income Tax

The new tax scheme has several advantages, but there is no exemption for any investment in it. The standard deduction, on the other hand, has undoubtedly been introduced to the new tax structure. On the other hand, if you want investment or other exemption, then you will have to file tax according to the old tax regime.

The old regime is the tax system that existed prior to the implementation of the new regime. There are approximately 70 exemptions and deductions available under this regime, including HRA and LTA, that can reduce your taxable income and minimise your tax payments. Section 80C, the most popular and generous deduction, allowing for a reduction in taxable income of up to Rs.1.5 lakh. The taxpayers are offered the option of choosing between the existing and new tax regimes.

Many exemptions are available in the old tax regime as mentioned above. Today we are going to tell you about it.

Deductions available under Old Tax Regime

1. Standard Deduction: Deduction of Rs.50000 for salaried indviduals.

2. Section 80CCD(1b): Additional deduction of up to Rs.50,000 for deposits in NPS account.

3. Section 80TTA: This section provides for a deduction of a maximum of Rs 10,000 on interest income from savings account of a bank, co-operative society or post office for an individual or a HUF.

4. Section 80D: It allows deduction on health insurance premium.

5. Section 80G: Donations made to eligible trusts and charitable institutions are eligible for deduction.

6. Section 80C: Invest in EPF & PPF, ELSS, Life Insurance Premium, Home Loan Repayment, SSY, NSC & SCSS and get exemption.

Taxpayers should be aware that if you are an employee and do not choose between the new and old tax regimes, TDS will be deducted at the rates applicable to the new tax regime. A circular issued by the Central Board of Direct Taxes clarified the situation.

It said, “If the notice is not given by the employee, it will be deemed that the employee continues to be in the default tax regime and has not exercised the option to opt out of the new tax regime. shall deduct tax at source on the income under section 192 of the Act, in accordance with the rates provided under sub-section (IA) of section 115BAC.”