Old vs New Regime | Which is better? Tax Saving Options | Income Tax Planning Guide 2024

Income taxation in India has become complex with the introduction of the Old Regime vs New Regime. Individuals often struggle to determine the better option for tax payments. This is the season for proof submissions, and delaying action can result in significant tax payments in February or March. To avoid this, individuals earning 5L or more should refer to the table shown for regime comparison based on yearly salary and deductions.

Salaried individuals can change their regime while filing the Income Tax Return (ITR) if they become eligible for additional deductions or exemptions during the year.

Deductions play a crucial role, covering areas like home loans, investments, donations, and company reimbursements. The provided chart illustrates various deductions under the Old Tax Regime for a hypothetical annual income of 10L.

Exemptions and deductions differ; exemptions mean a portion of income is entirely tax-free, while deductions reduce taxable income. The first level of exemption is the EPF (Employer's Contribution), accounting for 12% of the basic pay. Deductions include standard deduction, home loan interest, and various investment options under sections 80C, 80D, 80E, etc.

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Avoid common mistakes like obtaining a house loan solely for tax benefits, making meaningless investments for tax saving, or opting for ULIP plans. Utilize joint housing loans for maximum benefits, validate HRA proofs, and avoid fake proofs. Strive for maximum deductions, but prioritize investments aligned with broader financial goals.

Lastly, be cautious about common mistakes in tax-saving efforts. Saving taxes should be incidental, not the primary driver of investment decisions. Prioritize investments aligned with financial goals, as chasing short-term tax breaks may not contribute to long-term wealth growth. Focus on investments with higher potential returns, even if they offer less immediate tax relief.


Content taken from    • 2024 Income Tax Saving and Tax Planni...  
Courtesy : Asset Yogi

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