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Difference Between New And Old Tax Regime [ITR Filing 2024]

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In some ways, old tax regimes are good, and in some ways, new tax regimes. This means that both tax regimes have advantages and disadvantages. While the main objective of the old tax regimes is to encourage taxpayers to save, the new tax regimes are suitable for low-income workers and investors due to lower tax deductions and exemptions. The new tax regimes are safer and more straightforward, with reduced chances of tax evasion fraud. However, due to variations in people’s income, the nature of exemptions, savings habits, and investment levels, it has become difficult to choose between the New and Old Tax Regime. If you also want to know who is better in new regime vs old regime? If you want to know more, then read this blog. Every taxpayer needs to know the difference between new and old tax regime.

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In the blog, we will first look at the difference between the tax rates of both regimes, the difference in deductions, and practical examples of how the new regime will make a difference to each tax slab.

Difference Between New And Old Tax Regime

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Choosing the old tax regime over the new tax regime and choosing the new tax regime over the old tax regime depends on your profession and income. Therefore, it is essential for anyone who pays tax or files ITR to know the New vs Old Tax Regime. Deciding which new regime vs old regime is better for you depends on the tax saving deductions and exemptions you are eligible for in the old regime. Difference Between New And Old Tax Regime To understand and simplify the calculations, we have calculated the tax at different income levels (see table below) of a salaried individual below 60 years of age. This can determine which of the new and old tax regimes is good for you. The tax rates under both regimes are compared as below.

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New vs Old Tax Regime Slab:

Annual IncomeIncome Tax Slab Old RegimeNew Regime FY
Up to Rs. 3 lakhsNilNil
Rs.3 – 6 lakh5%5%
Rs.6 – 9 lakh20%10%
Rs. 9-12 lakh30%15%
Rs. 12-15 lakh20%
Rs. 15 Lakh and above30%
New vs Old Tax Regime Slab

Calculator For New And Old Tax Regime

You can calculate your tax by clicking on the link: https://incometaxindia.gov.in/pages/tools/tax-calculator.aspx. This is the Calculator for New and Old Tax Regime of the Income Tax Department.

You can use the calculator to calculate the tax on an individual’s income and compare old vs new tax regimes for income tax declarations in your company or to determine your tax exposure.

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An income tax calculator can be used to know the income tax to pay in the financial year. Enter your age, residential status, income, investments in tax-saving instruments, and income from other sources to determine your tax income for the financial year 2024-25 using this app. With the help of an income tax calculator, you can find out how much tax you have to pay after deducting tax exemptions, deductions, and exemptions.

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The government collects income tax on a person’s income. Every individual, business, cooperative society, trust, and other entity belonging to the Hindu Undivided Family (HUF) all have to follow income tax rules. Income tax is determined using tax slabs based on age and income. A person’s taxable income is calculated from their income after subtracting exemptions, deductions, and rebates. Deductions, exemptions, and other rules may be modified based on the Union Budget presented for that financial year.

Can We Switch Between New And Old Tax Regime

Your employer asks you to choose between New and Old Tax Regime every year. There is a rule that if you do not choose either the old or new regime, your taxes will be calculated under the new regime by default. However, you can opt for the old tax regime any time before the due date of filing your return for that assessment year. The number of times you can change between the new and old tax regime depends on your profession.

Salaried employees and business professionals can switch between the old and new tax regimes yearly. On the other hand, persons not falling into these categories can make changes between the old and new arrangements only once in their lifetime.

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How to Switch Between Tax Regimes?

It is relatively easy to change from old tax system to new tax system and from new tax system to old tax system. You can switch between tax regimes by following the steps mentioned below. During this time, you can easily navigate the process of choosing between the two systems.

Step 1: Choose between the old and new tax regime.

Step 2: Verify if you meet the eligibility criteria.

Step 3: Select the form accordingly from the above list.

Step 4: If you are salaried, search for the ITR form (like ITR-1 or ITR-2). Next, go to the relevant section to select the tax regime. Here choose the option of “New or Old Tax Regime” as per your requirement. Proceed to fill in the remaining sections of your ITR and submit the form.

However, for individuals with business or professional income, download and fill out Form 10IE. Form 10IE has to be submitted by 31st July of the assessment year. While filing your ITR, select the option “New Tax Regime.”

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Can We Switch Between New And Old Tax Regime Every Year

If you are a salaried person, you can choose between the new and old tax regime every financial year. However, the new tax regime will be the default tax regime in FY 23-24. Individuals can switch to the old system depending on their income.

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