As expected, Finance Minister Nirmala Sitharaman did not offer any rebate related to income tax. Indian middle class has no reason to cheer as there were no tax sops announced in Interim Bidget 2024. “Keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” Sitharaman said while presenting a vote on account or an interim Budget for 2024-25.
New vs old tax regime
In Budget 2023, the Modi Government brought in multiple new regulations for income tax. One notable announcement about personal taxation was making the new income tax regime the default regime. However, the citizens have the option to avail the benefits of the old tax regime.
Old income tax regime vs New: Which one you should opt for?
If you wish to opt for the new tax regime you have to forgo various tax deductions and exemptions otherwise available under the old regime. “Under the new tax regime, salaried people cannot avail major benefits of items like standard deduction, House Rent Allowance (HRA), Leave Travel Assistance (LTA), and even some of the allowances allowed for performing duties. Various deductions like those available under Section 80 C (comprised of various items like EPF, LIP, School Fee, PPF, NSC, ELSS, home loan repayment etc.) , 80D (for health insurance premiums) , 80 CCD(1) & 80 CCD(1B) (for NPS) will also not be available to both categories of taxpayer i.e. salaried and self-employed. You also forfeit the claim for home loan interest for self-occupied as well as to set off or carry forward the loss in respect of the let-out property. You also will not be able to set off any brought forward losses against current income under the new scheme,” said tax and investment expert Balwant Jain.
According to Pankaj Mathpal, MD & CEO at Optima Money Managers, individuals who are in the job for the last 10-15 years should opt for the old tax regime as it provides deductions – HRA exemption, standard deduction, Professional tax, Section 80C, Section 80CCD(1B) and Section 80D. They would lose out on these deductions if they opt for the new tax regime.
He further added that those who are in the nascent phase of one’s careers can opt for the new tax regime as it would prove beneficial for them.
New regime tax slabs
-No tax would be levied for income up to ₹3 lakh
-Income between ₹3-6 lakh would be taxed at 5 per cent (tax rebate under Section 87A is available)
-Income between ₹6-9 lakh would be taxed at 10 per cent (tax rebate under Section 87A on income up to ₹7 lakh is available)
-Income between ₹9-12 lakh at 15 per cent
-Income between ₹12-15 lakh at 20 per cent
-Income of ₹15 lakh and above will be taxed at 30 per cent.
Old regime tax slabs
1) Income up to ₹2.5 is exempt from taxation under the old tax regime.
2) Income between ₹2.5 to ₹5 lakh is taxed at the rate of 5 per cent under the old tax regime.
3) Personal income from ₹5 lakh to ₹10 lakh is taxed at a rate of 20 per cent in the old regime
4) Under the old regime personal income above ₹10 lakh is taxed at a rate of 30 per cent.
How much tax will you pay if you opt for the new income tax regime
₹7 lakh-Nil
₹10 lakh- ₹54,600
₹20 lakh – ₹2,96,400
₹35 lakh – ₹7,64,000
₹55 lakh – ₹15,27,240
How much tax will you pay if you opt for the old income tax regime
₹7 lakh- ₹22,901
₹10 lakh- ₹31,221
₹20 lakh ₹2,88,371
₹35 lakh- ₹7,26,211
₹55 Lakh- ₹15,69,316
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 01 Feb 2024, 05:22 PM IST