While the brand new tax regime could supply some advantages, you’ll have to let go of many tax deductions and exemptions which might be obtainable within the previous tax regime.
Many of the deductions and exemptions obtainable within the previous tax regime should not there within the default tax regime.
Finance Minister Nirmala Sitharaman, within the Union Budget 2023-24, introduced varied adjustments within the new tax regime with an goal to make it extra enticing for taxpayers. The tax slabs within the new tax regime had been revised whereas the rebate restrict was elevated from Rs 5 lakh to Rs 7 lakh. These adjustments are set to return into drive on April 1.
The new tax regime can even turn out to be the default tax system for everybody within the new monetary 12 months. It implies that in the event you don’t specify your selection, your earnings tax will probably be calculated as per the brand new tax regime. The previous tax regime will stay obtainable to taxpayers.
While the brand new tax regime could supply some advantages, you’ll have to let go of many tax deductions and exemptions which might be obtainable within the previous tax regime.
Here, we’ve got simplified all exemptions and deductions you’ll be able to declare within the previous and new tax regimes.
Old Tax Regime
The previous tax regime presents varied exemptions and tax deductions which assist scale back the tax burden on people. Some deductions are given beneath Sections 80C, 80CCC, AND 80CCD of the Income Tax Act. These embody equity-linked financial savings scheme (ELSS) funds, National Pension Scheme, Unit-Linked Insurance Plan (ULIP), Tax Saving fastened deposits, Public Provident Fund, Senior Citizen Savings Scheme, and Sukanya Samriddhi Yojana.
Also Read:Â Income Tax Calculator Online: How To Know Your Tax Liability On IT Department Portal?
If you go for the previous tax regime, then you may as well save tax utilizing your property mortgage. Section 80C of the IT Act additionally gives tax deductions of as much as Rs 1.5 lakh on the principal reimbursement of your property mortgage. You also can declare tax deduction of as much as Rs 2 lakh on curiosity payable in direction of your property mortgage beneath Section 24 of the IT Act. In addition, first-time house patrons also can scale back their tax legal responsibility by Rs 50,000 by claiming deductions beneath Section 80EE of the IT Act.
New Tax Regime
Many of the deductions and exemptions obtainable within the previous tax regime should not there within the default tax regime. You can nonetheless avail of sure advantages. You can declare a normal deduction of Rs 50,000 whereas a rebate of as much as Rs 7 lakh can also be obtainable beneath Section 87A. Family pensioners, in the meantime, can declare a normal deduction of Rs 15,000 within the new tax regime. If your employer is contributing to your NPS account then you’ll be able to declare deductions beneath Section 80CCD (2) of the IT Acct.
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