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The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

Confused about the new tax regime? Here's when you should opt for it

About 6 crore <keyword id="19948101" type="General" weightage="100" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> have been filed for income earned in 2023-24, of which 70 per cent were filed under the new <keyword id="22442211" type="General" weightage="20" keywordseo="simplified-tax-regime" source="keywords">simplified tax regime</keyword> which offers lower rate of tax, Revenue Secretary Sanjay Malhotra said on Tuesday. Addressing the post-budget session of PHD Chamber of Commerce and Industry, Malhotra said there were apprehensions as to whether people would shift to the simplified tax regime. "About 6 crore filed for last year and 70 per cent is under the new income tax regime. The whole move has been towards simplicity with the ultimate purpose being to reduce the <keyword id="20380188" type="General" weightage="20" keywordseo="compliance-burden" source="keywords">compliance burden</keyword>," Malhotra said. For the 2022-23 fiscal, 8.61 crore ITRs were filed. The idea behind comprehensive income tax review as announced in the <keyword id="19936553" type="General" weightage="20" keywordseo="budget" source="keywords">Budget</keyword> is to make the tax law simpler. "We will come up with a draft and then we will seek suggestions," Malhotra said. Currently, India has two <keyword id="20155151" type="General" weightage="20" keywordseo="personal-income-tax" source="keywords">personal income tax</keyword> regimes. In the old income tax regime, the <keyword id="20452955" type="General" weightage="20" keywordseo="tax-rates" source="keywords">tax rates</keyword> are relatively high but taxpayers can claim several exemptions and <keyword id="20385232" type="General" weightage="20" keywordseo="deductions" source="keywords">deductions</keyword>. However, in the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, tax rates are lower but fewer deductions.

About 6 cr ITRs filed for FY24; 70% under new tax regime

If you earn ₹15 lakh, you save ₹15,600 with the new tax regime but you can’t claim tax benefits worth ₹73,000

The new tax regime (<keyword id="6354892" type="General" weightage="80" keywordseo="ntr" source="Orion">NTR</keyword>) will now be considered as a default regime, but it may not necessarily be a better option for all the taxpayers, experts said. Preeti <keyword id="445" type="General" weightage="80" keywordseo="sharma" source="Orion">Sharma</keyword>, Partner, Tax and Regulatory Services, BDO India, said that <keyword id="25455" type="General" weightage="50" keywordseo="finance" source="Orion">Finance</keyword> Minister <keyword id="129243" type="General" weightage="50" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> has made conscious efforts to make the NTR more attractive for the taxpayers. "The NTR shall now be considered as a default regime for all the taxpayers, but that does not necessarily mean a better regime for all. Taxpayers still need to look at their personal situation, various investments and expenditure that are eligible for tax exemption under the old regime and then decide which regime is better for them," Sharma said. Although the NTR is the default regime, an individual still has the option to opt for the old regime if the same is more beneficial in terms of tax outflow, Sharma said. Deepashree Shetty, Associate Partner, Tax and Regulatory Services, BDO India, said several measures have been introduced to promote the NTR for individual taxpayers. These include increasing the basic exemption limit, change in the income slabs, extending the scope of tax rebate, extension of standard deduction, etc. The proposal to make NTR as the default tax regime supports the government's initiative to digitise and simplify the tax process for individuals. This would also mean significant changes in the payroll procedures of employers for salaried taxpayers, Shetty said. The income in personal income tax is expected to raise disposable incomes and transition the taxpayers to the new tax regime. Suman Chowdhury, Executive Director and Chief Analytical Officer, Acuite Ratings &amp; Research, said, "The rationalisation of the personal income tax structure is expected to lead to two things (i) raise disposable incomes for the middle class, particularly the younger taxpayers (ii) transition of the taxpayers to the new tax regime with minimal exemptions and lower and simpler tax slabs. This is expected to give a moderate boost to domestic consumption." S. Ranganathan, Head of Research at LKP Securities, said, "Thee Budget has put more money in the hands of the people through relief from income tax which to our mind is a very positive step." <keyword id="679937" type="General" weightage="80" keywordseo="sitharaman" source="Orion">Sitharaman</keyword> on Wednesday announced new tax slabs for 2023-24, under which no tax will be payable for income up to Rs 7 lakh per annum under the new income tax regime. "Currently, those with an income of up to Rs 5 lakh don't pay any income tax. I proposed to increase the tax rebate limit to Rs 7 lakh in the new tax regime," Sitharaman said in her Budget speech. A tax of 5 per cent would be levied on total income between Rs 3 lakh and Rs 6 lakh, 10 per cent tax would be imposed on income between Rs 6 lakh and Rs 9 lakh, while it will be 15 per cent on income between the range of Rs 9 lakh and Rs 12 lakh. On the income range of Rs 12 lakh to Rs 15 lakh, 20 per cent tax would be levied, while the tax would be 30 per cent on an income slab of Rs 15 lakh and above, the finance minister informed. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/income-tax-bonanza-capex-push-emerge-as-the-stars-of-budget-2023-24/articleshow/97521646.cms">Income tax bonanza, capex push emerge as the stars of Budget 2023-24</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/budget-for-stipend-to-47-lakh-youth-under-apprenticeship-scheme/articleshow/97522243.cms">Budget for stipend to 47 lakh youth under apprenticeship scheme</a>

New tax regime may not be necessarily beneficial for all taxpayers: Experts

In a relief to taxpayers opting for the new tax regime, individuals earning a marginally higher income than the no-tax ceiling of ₹7 lakh will pay tax only on the differential income after the government amended the Finance <keyword id="19032" type="General" weightage="80" keywordseo="bill" source="Orion">Bill</keyword>. The Finance Bill 2023, passed by the <keyword id="6355187" type="General" weightage="50" keywordseo="lok-sabha" source="Orion">Lok Sabha</keyword> on Friday, has proposed a marginal relief to taxpayers under the new tax regime. Explaining the provision, the finance ministry said under the new tax regime with effect from April 1, if a taxpayer has an annual income of ₹7 lakh s/he pays no tax. But if s/he has an income of ₹7,00,100 s/he pays a tax of 25,010. Thus an additional income of ₹100 leads to a tax of ₹25,010. Hence, marginal relief is proposed to that so that the tax that one pays should not be more than the income that exceeds ₹7 lakh (₹100 in this case), the ministry said. Nangia Andersen LLP Partner Sandeep <keyword id="45125" type="General" weightage="80" keywordseo="jhunjhunwala" source="Orion">Jhunjhunwala</keyword> said the amendment to Finance Bill seeks to provide a marginal relief to individual taxpayers having borderline income by proposing a deduction of income tax payable in excess of the differential income above ₹7 Lakh. "Working out the math, an individual having income up to (approx.) <keyword id="164031" type="General" weightage="50" keywordseo="inr" source="Orion">INR</keyword> 7,27,700 could stand to benefit from this marginal relief," Jhunjhunwala added. The budget 2023-24 had announced the tax rebate whereby no tax would be levied on those with an annual income of up to ₹7 lakh under the new tax regime. The move which experts felt was a push for the salaried class taxpayer to switch to a new tax regime where no exemptions on investments are provided. Under the revamped new tax regime, no tax would be levied for income up to ₹3 lakh. Income between ₹3-6 lakh would be taxed at 5 per cent; ₹6-9 lakh at 10 per cent, ₹9-12 lakh at 15 per cent, ₹12-15 lakh at 20 per cent and income of ₹15 lakh and above will be taxed at 30 per cent. Further, a ₹50,000 standard deduction was allowed under the new regime. Now the government has brought in amendments to the Finance Bill 2023, which has given 'marginal relief' to those taxpayers with annual income of a little over ₹7 lakh. Although the government has not specified the threshold income which would be eligible for marginal relief, tax experts said as per computation, individual taxpayers with income of ₹7,27,777 would be benefited by this relief. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/health/news/half-of-respiratory-infection-cases-admitted-to-hospitals-in-2-months-are-of-h3n2-says-govt/articleshow/98972047.cms">Half of respiratory infection cases admitted to hospitals in 2 months are of H3N2 says govt</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/hal-reliance-industries-it-stocks-in-focus-on-friday/articleshow/98957519.cms">Sensex buckles under selling pressure in metal, realty and PSU bank stocks</a>

Taxpayers with income marginally over ₹7 lakh to get relief under new tax regime

New Delhi, Feb 1 () The government on Saturday introduced new tax slabs with reduced rates for an annual income of up to Rs 15 lakh for those foregoing exemptions and deductions under a simplified tax regime.
The new income tax system is optional and a taxpayer can choose to remain in the existing regime with exemptions and deductions, Finance Minister Nirmala Sitharaman said while presenting her second Budget in the Lok Sabha. 
It is to be noted that once the option to opt for new tax regime is exercised, it will remain valid for subsequent years.
Sitharaman further said that those earning up to Rs 5 lakh will not pay any tax either in the old regime or in the new regime. 
"In order to provide significant relief to the individual taxpayers and to simplify the income-tax law, I propose to bring a new and simplified personal income tax regime wherein income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions," Sitharaman in her Budget Speech. 
Under the new tax proposal, people with an annual income of up to Rs 2.5 lakh will not have to pay any tax.
For income between Rs 2.5 lakh to 5 lakh, the tax rate (as earlier) is 5 per cent. 
Further, those with an income of Rs 5 lakh to Rs 7.5 lakh will have to pay a reduced tax rate of 10 per cent; between Rs 7.5 lakh and Rs 10 lakh 15 per cent; between Rs 10 lakh and 12.5 lakh 20 per cent; between Rs 12.5 lakh and 15 lakh 25 per cent; and above Rs 15 lakh 30 per cent.
"The new tax regime shall be optional for the taxpayers. An individual who is currently availing more deductions and exemption under the Income Tax Act may choose to avail them and continue to pay tax in the old regime," the minister said.
 The proposal would lead to a revenue sacrifice of Rs 40,000 crore per annum, the minister added.
Observing that there are about 100 tax exemptions and deductions, she said that 70 of them are being removed in the new simplified tax regime, while the remaining will be reviewed and examined in due course.
She further said that in the new tax regime, substantial tax benefit will accrue to a
taxpayer depending upon exemptions and deductions claimed by him. 
For example, a person earning Rs 15 lakh in a year and not availing any deductions etc will pay only Rs 1,95,000 as compared to Rs 2,73,000 in the old regime. Thus his tax burden shall be reduced by 78,000 in the new regime, the minister said. 
Some of the deductions that have been proposed to be removed include, standard deduction, house rent allowance, under Article 80 of IT Act (which include insurance premium, contribution towards provident fund and certain pension funds). NKD CS
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Confused about the new tax regime? Here's when you should opt for it

Ira Alok Puranik

About 6 cr ITRs filed for FY24; 70% under new tax regime

PTI

If you earn ₹15 lakh, you save ₹15,600 with the new tax regime but you can’t claim tax benefits worth ₹73,000

Prabhjote Gill

New tax regime may not be necessarily beneficial for all taxpayers: Experts

IANS

Taxpayers with income marginally over ₹7 lakh to get relief under new tax regime

PTI

Budget proposes new tax slabs, lower rates for those foregoing exemptions

PTI

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