How to optimize tax savings under the new tax regime in FY24?

In Budget 2023, Finance Minister Nirmala Sitharaman revised the income tax slab rates under the new tax regime. Tax savers should now allocate their investments more wisely in the new financial year, FY24 in advance, to meet their financial objectives and reduce their tax liability. Taxpayers should be informed about the amendments and options available to reduce their taxes as the new tax regime comes into effect in FY24. Here are some pointers coined by various industry experts to help you do just that:

S Ravi, former chairman of BSE (Bombay Stock Exchange)

With the new tax regime coming into force in FY24, taxpayers need to be mindful of the changes and opportunities available to optimize their taxes. Here are some tips to help you do this:

1. Plan your investments: Invest in instruments eligible for tax deductions such as Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Pension Scheme (NPS) and tax-saving fixed deposits. This will not only help you save tax but also get good returns.

2. Claim all tax deductions: Make sure you claim all tax deductions available to you. For example, deduction on home loan, education loan, health insurance premium and medical expenses. These can reduce your taxable income significantly.

3. Use Section 80C to your advantage: Make full use of Section 80C by investing in schemes that qualify for deductions like PPF, ELSS, NPS, and tax-saving fixed deposits. The maximum limit for this section is 1.5 lakh, so make sure you invest accordingly.

4. Opt for the new tax regime, if it benefits you: The new tax regime offers lower tax rates, but without any deductions. So, if you do not have significant deductibles to claim, it may be more beneficial to opt for the new regime.

5. File your tax return on time: Make sure that you file your tax return on time to avoid paying any penalty or interest. Plus, e-filing your return makes the process faster and more convenient.

Archit Gupta, Founder and CEO, Clear

The scope of tax saving under the new tax regime is more limited as compared to the old tax regime. However there are still a few ways it can be done.

1. NPS contribution through employer under section 80CCD(2). Under this, a maximum of 10% of basic salary + DA can be deducted from income.

2. Traveling allowance for travel between home and office if such allowance is allowed by the employer if the car is owned by the employee. Depending on the engine capacity of the car, such allowance may be up to 2,400 per month and if the driver is employed then the additional amount can also be claimed as deduction.

Abhishek Soni, Co-Founder & CEO, Tax2Win

Budget 2023 has come with many changes in the new tax regime. As per the new tax regime, there will be no tax on income up to Rs 3 lakh. On income up to Rs. There will be no tax liability up to 7 lakhs as the benefit of exemption is available under section 87A. Salaried taxpayers can also optimize tax by claiming standard deduction 50,000. Individuals can optimize their tax liability by understanding tax slabs, maximizing eligible deductions under the new tax regime, restructuring salaries and investing in tax-efficient options.

Anita Basrur, Partner Sudit K Parekh & Company LLP

The Finance Act, 2020 introduced an alternative new tax regime with lower tax rates and lower deductions. The new tax regime was introduced with an intention to simplify tax computation, ease compliance and reduce tax disputes. To gain widespread popularity and acceptance, the Finance Act 2023 has made the new regime the default regime. In addition, the Finance Act 2023 has attempted to make the scheme more attractive by introducing standard deduction, increasing the maximum exemption limit, reducing the surcharge rate, increasing the exemption limit amount and reducing tax rates.

The new regime will allow taxpayers to invest in more attractive avenues of investment such as equity, start-ups, etc. However, taxpayers will still have to assess their tax saving investments such as 80C, 80D, HRA, on the basis of interest. on home loans etc. to determine which tax regime is beneficial to them. It appears that the intention is to eventually bring in a single tax regime with fewer deductions/exemptions. However, as of now both the tax regimes will co-exist where the new tax regime will be treated as a default tax regime while the old tax regime will need to be specifically opted for on a year to year basis.

Suman Banerjee, CIO, Hedonova

The new tax regime, which has become the default option from FY 2023-24, offers certain tax benefits. Taxpayers opting for this arrangement will get the standard deduction. 50,000 under section 16(ia) of the Income Tax Act 1961. Members of this arrangement also get exemption under section 87A up to 100% of the amount of income tax payable on the total income. 7 lakhs.

The government also provides other benefits including traveling allowance, family pension and daily allowance. Taxpayers can optimize their tax cost by opting for the new tax regime instead of the old one, especially if they have recently started earning and do not have enough money to invest in tax-saving instruments or do not have a home loan Is.

Prateek Toshniwal, Serial Investor, Financial Advisor and Co-founder of IVY Growth Associates (India) | MI Capital (UAE)

Under the new tax regime for FY24, taxpayers can optimize their taxes by availing deductions and exemptions available under the old tax regime. Taxpayers can choose between the old tax regime with higher deductions and exemptions or the new tax regime with lower tax rates but fewer deductions and exemptions. It is important to carefully evaluate which arrangement is more beneficial based on the individual’s income, investment and tax-saving options.

One strategy to optimize taxes under the new tax regime is to maximize investments in tax-saving instruments such as Public Provident Fund, National Pension System, Equity Linked Savings Scheme and tax-saving fixed deposits. Additionally, taxpayers can claim deductions under section 80C, 80D and 80G for investments in specified areas such as health insurance, donations and tuition fees.

Overall, taxpayers should consider their options and take an informed decision to optimize their taxes under the new tax regime for FY24.

Suresh Surana, Founder, RSM India

Under the new tax regime, every taxpayer can optimize his taxes in the following ways:

1. Salaried individuals or pensioners with total income up to 7,50,000 can claim standard deduction u/s 16(ia) of the IT Act. 50,000 and thereafter claim exemption under section 87A up to Rs. 25,000 thereby making his effective tax rate nil.

2. Further, since the highest tax surcharge rate under the new tax regime has been reduced from 37% to 25% for individuals having total income above Rs. 5 crores, thus reducing the effective tax rate of 42.744% to 39%. With such persons with total income exceeding Rs. 5 crore can opt for the new tax regime to avail tax rate benefits.

Akhil Chandna, Partner, Tax, Grant Thornton India

On February 1, 2023, the Union Budget 2023-24 introduced revised tax slabs under the new tax regime, increasing the basic exemption limit from Rs 2.5 lakh to Rs 3 lakh. To optimize tax under the new tax regime, a person can claim:

1. Standard deduction of Rs 50,000 from employment income/pension

2. Deduction for employer’s contribution to NPS

3. Expenses earned from family pension

4. In the case of rental income from property, standard deduction up to 30 per cent of the annual value of the let-out property

Also, interest and maturity proceeds from schemes such as Public Provident Fund (PPF) and Sukanya Samriddhi Account and life insurance policies will remain tax-free under the new regime.

Satyen Kothari, Founder & CEO, Cube Wealth

In the new tax regime, individuals can opt for a lower tax rate without exemptions and deductions. To optimize tax under this regime, individuals can do the following:

1. Choose the new tax regime, if it results in a lower tax liability.

2. Plan investments to maximize deductions under section 80C, 80D, etc.

3. Avail deductions like interest on home loan, rent paid etc., if eligible for the same.

4. Plan for tax-saving investments like Equity-Linked Savings Schemes (ELSS), National Pension System (NPS) etc. as they offer the twin benefit of tax deduction and capital appreciation.