Though the brand new tax regime is the default tax regime in 2023-24, taxpayers have the selection to go for the previous one whereas submitting ITR.
While submitting ITR for FY2023-24, taxpayers want to decide on an revenue tax regime — between the brand new regime and the previous regime; the tax charges and advantages are completely different in each regimes
New Tax Regime Vs Old Tax Regime FY24: The on-line submitting of revenue tax returns (ITR) for AY 2024-25 (or FY 2023-24) has began with the revenue tax workplace enabling e-submitting kinds for ITR-1, ITR-2 and ITR-4. While submitting the ITR, taxpayers want to decide on an revenue tax regime — between the brand new regime and the previous regime. The tax charges and advantages are completely different in each regimes. Here are full particulars concerning the regimes and their tax charges, and who ought to select what.
In the Budget 2023, underneath new tax regime, Finance Minister Nirmala Sitharaman had elevated the revenue tax exemption restrict by Rs 50,000 to Rs 3 lakh and the rebate underneath Section 87A of the Income Tax Act, 1961, was additionally raised from Rs 5 lakh to Rs 7 lakh, that means that these incomes as much as Rs 7 lakh don’t have to pay any tax underneath the brand new regime.
Income Tax Rates for FY2023-24 (AY 2024-25):
| Income Tax Slab (In Rs) | Old Tax Regime | New Tax Regime |
| 0-2,50,000 | 0% | 0% |
| 2,50,001-3,00,000 | 5% | 0% |
| 3,00,001-5,00,000 | 5% | 5% |
| 500,001-6,00,000 | 20% | 5% |
| 6,00,001-9,00,000 | 20% | 10% |
| 9,00,001-10,00,000 | 20% | 15% |
| 10,00,001-12,00,000 | 30% | 15% |
| 12,00,000-15,00,000 | 30% | 20% |
| 15,00,0001 & Above | 30% | 30% |
Note: For senior residents (above 60 years of age), the revenue tax underneath the previous regime is exempt as much as Rs 3,00,000; whereas for tremendous senior residents (above 80 years), revenue as much as Rs 5,00,000 is exempt.
Apart from this, a well being and schooling cess is levied at 4 per cent on revenue tax.
Taxpayers have the choice to decide on both the previous tax regime or the brand new tax regime. The default scheme could be the brand new tax regime.
Under the brand new tax regime, a resident particular person (whose internet revenue doesn’t exceed Rs 7 lakh) can avail rebate underneath part 87A. The quantity of rebate is 100 per cent of revenue tax or Rs 25,000, whichever is decrease.
Under the previous tax regime, a resident particular person taxpayer (whose internet revenue is as much as Rs 5 lakh) can avail rebate underneath part 87A. The quantity of rebate is 100 per cent of revenue tax or Rs 12,500, whichever is decrease.
New Regime Vs Old Regime: Which One Should You Choose?
According to revenue tax specialists, in the event you don’t have any financial savings, investments and deductions, the brand new tax regime is useful; nonetheless, the previous tax regime will be enticing in the event you make use of financial savings, investments, and deductions.
The new tax regime presents decrease tax charges however eliminates lots of the exemptions and deductions that have been accessible underneath the previous regime. On the opposite hand, the previous tax regime has larger tax charges however permits for extra deductions and exemptions.
“It is recommended to evaluate your personal financial circumstances, including your taxable income, deductions, and exemptions, before making a decision. Additionally, you may want to consult with a tax professional to help determine which tax regime would be more beneficial for you. Ultimately, the choice between the new tax regime and the old tax regime will depend on your individual financial situation and tax obligations,” they stated.
However, in broad phrases, these having revenue as much as Rs 7 lakh ought to go straight for the brand new tax regime because the revenue tax can be nil, the tax specialists stated.
