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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

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

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

Mumbai, Feb 1 () Tax experts and analysts on Saturday said the optionality clause in the new income tax budget proposal is a big disincentive for investment in tax-saving instruments, which will dampen the markets and have ripple effects across all asset classes, including housing.
The Union Budget for 2020-21 has proposed new income tax slabs and reduced the tax rate for different slabs, with lower payouts provided the taxpayer foregoes all the existing exemptions/deductions.
Under the proposal, a person with an annual income of Rs 5-7.5 lakh will have to pay a lower tax rate of 10 per cent; Rs 7.5-10 lakh at 15 per cent; Rs 10-12.5 lakh at 20 per cent; Rs 12.5- 15 lakh at 25 per cent; and above Rs 15 lakh 30 per cent tax will be applied.
The proposal will lead to a revenue sacrifice of Rs 40,000 crore per annum, if all the taxpayers opt for the new structure.
It can be noted that household savings have been steeply declining over the years. According to government data household savings have dropped to 17.2 per cent of GDP in FY18 from 23.6 per cent in FY12.
The move to tax dividend at the hands of the investors will also have a deep negative impact on the markets as it will force investors to look for other asset classes like fixed deposits.
"With the optional new regime, taxpayers will have to evaluate what works better for them. Those committed to long-term savings and investing via 80C may be discouraged and this may likely de-motivate them from investing in tax-saving asset classes," said Archit Gupta, founder of Cleartax.
However, he said shifting of the dividend distribution tax from the companies to the individual investor is a good step as it increases dividend received in the hands of the taxpayer. Those above 20 per cent tax slab will now face more tax on their dividend income.
Biocon CMD Kiran Mazumdar Shaw tweeted that removal of exemptions and DDT will hurt individual tax payer and affect consumer spending.
Ajit Mishra of Religare Broking said the widely expected personal income tax cuts have come in with lots of caveats, leaving no major impacts.
Similarly, Dhiraj Relli of HDFC Securities said the proposals on the tax front will not stimulate positive sentiments for the capital markets.
RK Gurumurthy of Lakshmi Vilas Bank said tinkering with the personal tax and some structural changes in Dividend Distribution Tax (DDT) will work are cosmetic benefits that the small and medium investor will like.
However, Vivek Gambhir, head of Godrej Consumer Products said reduction in personal income tax slabs will provide some relief to the middle class, which in turn will increase disposable income and drive demand.
Similarly, Tapan Singhel of Bajaj Allianz General Insurance said the new personal income tax regime will help put more money in the hands of people, which should boost consumption.
Vijay Chandok of ICICI Securities also supported the view saying rationalisation of personal income tax rates is likely to be key catalyst for consumption pickup.
Kamlesh Rao of Aditya Birla Sun Life said the income tax relief will improve public sentiment and augur well for the economy.
SOTC managing director Vishal Suri said the new personal income tax regime will put more disposable income in the hands of individuals leading to more consumer spends and help consumption, especially tourism," he added. BEN BAL
BAL

New income tax regime big disincentive to investment: Analysts

In spite of major concessions announced by way of an ordinance in October 2019, the Indian economy continued to dwindle in the backdrop of the global economic meltdown. The current economic situation necessitated bold steps from our Hon’ble Finance Minister (‘FM’) to present a simplified budget that would result in a quick economic turnaround. However, whether such a ‘Simplified’ budget really unlocked potential for an economic turnaround, remains a question. Some key amendments coupled with their challenges are listed below: Some key amendments: Personal Tax Regime (‘PTR’): In line with the Concessional Tax Regime (‘CTR’) introduced by the Hon’ble FM in October 2019 which focused solely on corporates, a PTR has been introduced which focuses on providing alternative lower tax rates to individuals/HUF. The aforesaid concessional tax rate is applicable subject to the following conditions: <ol><li>The Individuals and HUFs having various incomes would not be allowed to claim any deductions/incentives, them being - <ul><li>Certain business <keyword id="891931" type="PERSON" weightage="20" keywordseo="deductions">deductions</keyword> and deductions from other incomes</li><li>House property deduction</li><li>Salary deductions including standard deduction and professional tax</li><li>Major deductions under Chapter VI-A (i.e. deductions under section 80C, 80D, etc) and</li><li>Set-off/carry forward of losses in relation to the above </li></ul></li></ol><ol><li>Further, <keyword id="1064766" type="ORGANIZATION" weightage="20" keywordseo="alternative-minimum-tax">Alternative Minimum Tax</keyword> (‘AMT’) shall not be applicable to an individual/HUF opting for PTR. Consequently, carry forward and set off of AMT credit shall not be allowed.</li></ol>In view of the above amendments, an individual having salary income as a major source of income and making investments in various schemes/instruments (For example, LIC premiums, PPF, ELSS, etc.) may not consider opting for PTR. It needs to be seen whether such a scheme is welcomed by the taxpayers at large or not. Dividend Distribution Tax (‘DDT’) Abolition: The Finance Bill proposes to abolish DDT in the hands of domestic companies and tax the same in the hands of the recipient. Accordingly, domestic companies declaring dividends shall be required to deduct TDS @ 10% on dividends exceeding INR 5,000 per shareholder. Further, it has been proposed to provide a deduction of interest expense of upto 20% of dividend income received in the hands of the shareholders under income from other sources. Lastly, in order to remove the cascading effect of taxes, dividend distributed by companies for a particular year (subject to conditions) shall be allowed as a deduction from dividend income. The benefit of deduction has also been extended to companies opting for CTR. However, the amendment leaves certain areas which need to be addressed: <ul><li>No scientific mechanism exists to allow deduction of expenses to the shareholders and only an ad-hoc deduction of interest expense capped at 20% of dividend income is allowed</li><li>In view of the above, the Company vs LLP structure needs to be re-evaluated</li><li>In case of banks and NBFCs where dividend income is a major source of business income, no separate provisions have been carved out</li></ul>Though the above is in line with the longstanding demand of the corporate world, only time will be able to tell whether the objective of earning higher taxes is achieved by these amendments. The above amendments also open-up the question of selection of an offshore jurisdiction for investing in Indian companies. Other Key Amendments A. Start-ups – Rationalising tax provisions and ESOP Taxation With a view to rationalise the tax deduction provisions for start-ups, the following amendments are proposed: <ul><li>100% profit deduction for an eligible start-up for any 3 consecutive years out of 10 years; and </li><li>Threshold of turnover for an entity, to be eligible as a start-up, has been increased to INR 100 Crores </li></ul> Further, in order to ease the burden of tax payment for employees of eligible start-ups, it is proposed to defer the timing of taxation of ESOPs perquisites. The amendment proposes to tax ESOP at the earliest of the following event: <ul><li>Expiry of 5 tears from the end of the relevant financial year; or</li><li>Date of sale by individual taxpayer; or</li><li>Date of cessation of employment</li></ul>These are welcome steps that would go a long way in providing ease of doing business for start-ups. Existing companies in the technology space must evaluate the possibility of obtaining necessary approval to claim exemption. B. Tax withholding on e-commerce transactions TDS @ 1% shall be made applicable on payments by e-commerce operators (who own/operate a digital e-commerce platform) to e-commerce participants (who sell goods/providing services/both). Further, exception is provided for payments to such a participant who is an individual/HUF if the transaction value during a particular AY is less than INR 500,000 This amendment will not only add compliance obligation on the e-commerce platforms but would also bring larger population of service providers and goods suppliers under the tax net. C. Increasing Tax Audit Turnover Threshold The FM proposes to increase the turnover threshold for tax audit applicability to INR 5 Crores, provided that the aggregate cash receipts/cash payments by such taxpayer do not exceed 5% of the total receipts/payments respectively during the financial year. This move is again intended with a view to move towards a cashless economy. D. Stay by the Hon’ble Income-tax Appellate Tribunal (‘ITAT’) ITAT may grant a stay of demand for upto a maximum of 365 days on a condition that the taxpayer deposits not less than 20% of the amount of tax, interest, fee, penalty, etc. Though the law seems to have been proposed, it would need to be seen whether condition can be applied to the judicial power of adjudicating authority. Since taxpayers at various levels are now being provided alternative tax regimes, the same may lead to complication of the tax regime with minimal benefits. TDS levied on dividend payments to shareholders/payments by e-commerce operators shall only increase the TDS compliance burden of large companies and e-commerce MNCs respectively. The impact of such complications and compliances on ease of doing business need to be evaluated. 
 <div type="image" title="Pranay Bhatia" msid="73984955" hostid="261"></div> Disclaimer: This article is written by Pranay Bhatia, a Partner and Leader of Tax &amp; <keyword id="344310" type="COMPANY" weightage="20" keywordseo="Regulatory-Services">Regulatory Services</keyword> at BDO India. The opinions expressed are entirely that of the author.

You Searched For "tax regimes" and got 7 results

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

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

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 income tax regime big disincentive to investment: Analysts

PTI

A top tax expert decodes the new Income Tax regime changes announced in the Budget

Pranay Bhatia

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