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The residents have the choice to decide on between the brand new and the outdated tax regime. Whereas the tax charges within the new regime are decrease, the outdated regime permits people to go for deductions and exemptions.
If you wish to discover out the tax charges of each the regimes, then learn this text.
The finance minister, Nirmala Sitharaman, introduced a brand new tax regime within the Finances 2020. The tax charges within the new regime are decrease in comparison with the outdated regime. Nevertheless, individuals who go for the brand new tax regime must forgo many of the exemptions and deductions. But when a taxpayer doesn’t wish to forgo the exemptions and deductions, then he/she will be able to go for the outdated tax regime.
The residents are allowed to decide on between each regimes. Therefore, a taxpayer can go for a regime that may assist him/her decrease his/her tax legal responsibility.
New Tax Regime
| Annual Earnings | Tax Fee |
| As much as Rs. 2.5 Lakhs | 0 |
| Between Rs. 2.5 Lakhs and Rs. 5 Lakhs | 5% |
| Between Rs. 5 Lakhs and Rs. 7.5 Lakhs | 10% |
| Between Rs. 7.5 Lakhs and Rs. 10 Lakhs | 15% |
| Between Rs. 10 Lakhs and Rs. 12.5 Lakhs | 20% |
| Between Rs. 12.5 Lakhs and Rs. 15 Lakhs | 25% |
| Above Rs. 15 Lakhs | 30% |
Outdated Tax Regime
Tax Charges for People Beneath 60 Years of Age-
| Annual Earnings | Tax Fee |
| As much as Rs. 2.5 Lakhs | 0 |
| Between Rs. 2.5 Lakhs and Rs. 5 Lakhs | 5% |
| Between Rs. 5 Lakhs and Rs. 10 Lakhs | 20% |
| Above Rs. 10 Lakhs | 30% |
Tax Charges for People Between 60 and 80 Years of Age-
| Annual Earnings | Tax Fee |
| As much as Rs. 3 Lakhs | 0 |
| Between Rs. 3 Lakhs and Rs. 5 Lakhs | 5% |
| Between Rs. 5 Lakhs and Rs. 10 Lakhs | 20% |
| Above Rs. 10 Lakhs | 30% |
Tax Charges for People Above 80 Years of Age-
| Annual Earnings | Tax Fee |
| As much as Rs. 5 Lakhs | 0 |
| Between Rs. 5 Lakhs and Rs. 10 Lakhs | 20% |
| Above Rs. 10 Lakhs | 30% |
It is very important needless to say within the new tax regime, the exemption restrict is Rs. 2.5 Lakhs for each taxpayer. There isn’t a increased exemption restrict for senior residents. Nevertheless, if a senior citizen needs to go for a better tax exemption restrict, then he/she will be able to choose the outdated regime.
In case an individual needs to go for the brand new tax regime, he/she must forgo exemptions and deductions, reminiscent of home lease allowance, depart journey allowance, Part 80C deductions, Part 80D deductions, customary deduction, and so on.
Moreover, people who wish to calculate their tax legal responsibility simply can use an revenue tax calculator. This calculator will calculate the tax quantity based mostly on the small print entered by the individual.
Which Regime to Decide?
If you happen to don’t have any deductions or exemptions to say, then it’s best to contemplate the brand new tax regime. Nevertheless, you possibly can go for the outdated regime if you happen to don’t wish to forgo your exemptions and deductions.
It’s smart to calculate the tax legal responsibility beneath each the regimes utilizing a calculator. Therefore, you’ll perceive which tax regime is extra useful for you.