If someone does not take advantage of taxpayer deduction and exemption, then the new tax system is better for him, because it has lower tax rate.
Salaried Individuals have high expectations from this budget. The salaried class hopes that the government will increase the limit of deduction and exemption in this budget. Salaried had to face salary cut during the Corona period. Apart from this, they are working from homes, due to which they are not getting the benefit of fuel re-investment. This is the reason why he hopes that the government will get more relief in the form of deduction and exemption.
In the Budget 2020, Finance Minister Nirmala Sitharaman announced a new tax system. The new tax system was implemented in the financial year 2020-21. If a taxpayer chooses a new system, he will not get the benefit of deduction and exemption. The tax rate in this is 5, 10, 15, 20, 25 and 30 percent. A tax of 30 percent is levied on earning over 15 lakhs. In the old tax system, 5 per cent on 2.5-5 lakh, 20 per cent on 5-10 lakh and income above 10 lakh is taxed 30 per cent. If a taxpayer chooses a new tax system, he will have to give up about 70 types of deductions and examinations.
Also Read: Good News: Here you are getting interest free loan up to 10 thousand rupees, know how to apply
Reduction less, new tax system better
Tax consultant Mukesh Kumar says that if someone does not take advantage of taxpayer deduction and exemption, then the new tax system is better for him, because it has lower tax rate. Tax rates are very high in the Old Tax System. Although taxpayers get the benefit of standard deduction of 50 thousand rupees, house rent allowance, leave travel allowance, house property loss, investment in PF, deduction on insurance premium.
Older systems benefit from increase in deduction limit
50 thousand rupees as standard deduction in old tax system, 2400 rupees as professional tax, 1.5 lakh rupees under section 80C, up to 1 lac rupees as house rent allowance (50% of basic salary) PAN without landlord The claim can be made. Taxpayers opting for the old tax system did not get the benefit of live travel allowance this year. This is the reason why they expect relief from deduction and execution. In such a situation, if the government announces relief, it will be good news for the old tax system.
