What are the differences between the old and new tax regimes? | Question of Money | Ep 34

In the 2020 budget, the Indian Finance Minister introduced a new tax regime with lower tax rates and fewer exemptions, effective from April 1, 2024. All taxpayers will automatically be enrolled in the new regime unless they choose to opt for the old one while filing their tax returns.

Key Differences:

#TaxRates: The new regime offers lower tax rates and a higher threshold for zero tax (up to Rs 3 lakh) compared to the old regime (up to Rs 2.5 lakh). A tax rebate applies for income up to Rs 7 lakh in the new regime, versus Rs 5 lakh in the old regime.

Surcharge: The new regime caps the surcharge at 25% for incomes above Rs 5 crore, while the old regime imposes a 37% surcharge.

Exemptions: The new regime eliminates several exemptions and deductions available under the old regime, such as Leave Travel Allowance (LTA), House Rent Allowance (HRA), Section 80C deductions (investments in post office schemes, EPF, NPS, etc.), home loan principal and interest deductions, and health insurance premiums.

Choosing the Right Regime:
The decision depends on individual income and savings habits. The new regime might be better for those earning less than Rs 7 lakh annually, who can't invest in 80C instruments, don't have a home loan, or large medical expenses.

Use the Income Tax Department's calculator to determine which regime minimizes your tax outgo.

If in doubt, use this calculator offered by the IT department to find out which regime minimises your tax outgo.

https://incometaxindia.gov.in/Pages/t...


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