Friends, in budget 2023, some concession is granted to income tax slabs, and the concession is granted only under the new regime. We all know that we can follow 2 types of regimes, We all know that we can follow 2 types of regime.
In fact, we can choose anyone from 2, Old Regime Vs New Regime. Extra-Exemption is granted only under the new regime. So now, a big question arises,
Should people shift from the old regime to the new regime? Which will be better among both?
In fact, many Pepole have confusion, For e.g., the Finance minister talked about the standard deduction, i.e., For Income > Rs 15.5 Lakhs, the standard deduction equals Rs 52,500. So, many people are thinking that, standard deduction of Rs52,500 is available under the new regime when income > Rs 15.5 lakhs, No, it’s not like that, What is the meaning of 52,500? I’ll provide you with a calculator of excel, in which you can do all the calculations.
According to your income, how many deductions you’ll plan if you go into the old regime. in that way, either the old regime is better for you or the new regime, So friends, let’s first talk about slabs.
Which types of slabs come under the old regime and the new regime, People are having a lot of confusion regarding this. Because multiple combinations are emerging now, For eg., there is a slab of Rs 0 -2.5 Lakhs then another slab of Rs 2.5-5 lakhs, etc. under the old regime. In the new regime, there is a slab of Rs 0-3 lakhs, another slab of Rs 3-6 lakhs, Now we have to do calculations for different slabs, So in every combination,, In whichever slab you fall, We’ll find out by calculator which regime is better for you, Put your income into this, put all the deductions which you’re planning, It’ll help you calculate everything.
If we’ll talk about slabs first, then let’s talk about old slabs first, If your income falls under the category 0 – 2.5 Lakhs, i.e., if your taxable income falls under 0-2.5 lakhs, then the tax rate is 0%, There is no confusion in this, People might have some confusion in the category of 2.5-5 lakhs, and the same confusion happens in the new regime. If your salary falls under the category of Rs 2.5 – 5 lakhs, then the tax rate would be 0% if your Net taxable income is less than Rs 5 lakhs, But if your net taxable income is more than 5 Lakhs. Assume it’s 8 Lakhs or 9 Lakhs, then obviously tax rate will be charged on every slab, The Tax Rate will be 5 % in case of a 2.5 – 5 lakhs slab, In the 5-10 Lakh category, the Tax rate is 20%, In the more than 10 Lakhs category, the Tax rate is 30%.
Now let’s proceed toward the New Regime, i.e., New Tax slabs declared in Budget 2023, According to that, if your income falls under Rs 0-3 Lakhs category, Then the tax rate is 0%, There is no confusion here, Now let’s talk about 3-6 Lakhs, If your income category falls under 3-6 Lakhs, then the Tax Rate will be 0% if your net Taxable income is less than 7 Lakhs, But if your net Taxable income is > 7 Lakhs, i.e., 8 Lakhs or 9 Lakhs, or 10 Lakhs. then the Tax Rate will be 5% in the Rs 3-6 lakhs category. Similarly, if we talk about the 6-9 Lakhs category, then Tax Rate will be 0% if Net Taxable income is < 7 Lakhs, the Tax Rate will be 10% if your Net Taxable income is > 7 Lakhs. The Tax Rate is 15% on 9-12 Lakhs income category, It is 20% in the Rs12-15 Lakhs category & 30% in >15 Lakhs category.
When you invest in the old tax regime, For eg., a tax deduction of 1.5 lakhs is available under section 80 C, You get the deduction if you plan medical insurance under 80D, You’ll get approx. 2 lakhs tax deduction on interest of home loan insurance, Apart from the standard deduction which is 50,000 under the old regime, you can add other inputs related to your additional tax planning. If we talk about the New regime, a standard deduction of 50,000 is now available here too, the old regime is better or the new regime? Both are better, because both are equally good.
