ITR Filing: Know Key Differences In Old And New Income Tax Regimes
Income Tax Return: Before submitting your return, perceive the shortcomings and advantages of every tax regime after which select your regime and file.
Union Finance Minister within the Union Budget 2023, declared that the brand new taxation regime would be the default one for taxpayers from FY24. Salaried taxpayers can change their revenue tax regime after they file their returns. The deadline to file the revenue tax returns is July 31, 2023. Before submitting their return, taxpayers must know the variations between the previous and new tax regimes in order that they will get to know which regime is extra helpful for them.
Five variations between previous and new tax regime:
Tax slabs:
Under the previous tax regime, folks with an annual revenue of Rs 2.5 lakh or beneath, are exempted from deductions. Under the brand new tax regime, the minimal taxation threshold is Rs 3 lakh.
Deductions accessible:
Those choosing the brand new tax regime must forego sure deductions underneath Leave Travel Allowance, House Rent Allowance, tuition payment and extra. These deductions are nonetheless accessible within the previous tax regime. If you could have a house mortgage, funds to a provident fund or National Savings Certificate, the previous tax regime could be higher for you. However, chances are you’ll seek the advice of a tax skilled to get an advise in line with your funds.
Rebate u/s 87A of the Income Tax Act
Under this rule, folks incomes as much as Rs 5 lakh yearly will get a rebate of Rs 12,500 underneath the previous tax regime. To make the brand new tax regime extra enticing to taxpayers, the federal government has raised the rebate eligibility to Rs 7 lakh.
Surcharge:
The authorities has decreased the surcharge for the very best revenue bracket underneath the brand new tax regime. The cost has been decreased to 25 per cent from 37 per cent, for revenue above Rs 5 crore. This decreased the efficient tax charge underneath the regime to 39 per cent from 42.74 per cent.
Pension scheme deduction:
The previous tax regime has extra deductions associated to the central authorities’s pension scheme. Taxpayers can stand up to Rs 50,000 as deduction u/s 80CCD(1B). This will not be accessible within the new tax regime. Deductions on the annuity plan of the Life Insurance Corporation of India or every other insurer in direction of the pension scheme will even not come underneath the brand new tax regime.
Before submitting your return, perceive the shortcomings and advantages of every tax regime after which select your regime and file. If you could have forgotten to go for a tax regime, your TDS will likely be deducted underneath the brand new regime by your employer. You can change the regime while you file your returns.
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