Does the new income tax regime suit you? Find out who should move from the old tax regime to the new one
tax matters can put you in a tight spot. Having coughed up a high tax for the past three months, Shilpa Bose knows this too well. The Delhi-based marketing professional submitted investment proof and other documents before the 15 January deadline, but still ended up paying a high tax. “The finance department didn’t take into account my tax-saving investments, medical insurance premium and home loan interest payments,” she says. That’s because Bose had not specified her choice of tax regime, which put her under the new tax regime by default and made her ineligible to claim many tax deductions and exemptions.
A lot of salaried taxpayers might be in the same boat. Last year’s Budget had made the new tax regime the default option for salaried taxpayers. The employees who did not inform their companies about the tax regime they preferred were automatically put in the new tax regime.
OLD REGIME
- SEC 80C INVESTMENTS
- HRA AND LTA
- NPS DEDUCTION
- HOME LOAN
- MEDICAL INSURANCE
NEW REGIME
- COMPLIANCE-FREE
- WIDER TAX SLABS
- LOWER TAX RATES
- Rs.7 LAKH TAX-FREE
The new tax regime has a higher threshold for tax relief, wider tax slabs and lower tax rates, but very few deductions and exemptions. No exemption for house rent allowance (HRA) and leave travel allowance (LTA) or deduction for tax-saving investments, medical insurance and interest paid on home and education loans (see graphic).
Old tax regime VS New tax regime
The old tax regime has four tax slabs.
Note1:If net income after all deductions and exemptions does not exceed `5
