Individual taxpayers have the option to switch between the new and old regimes. However, they should think carefully before switching. The new regime is beneficial for taxpayers who do not do tax-savings, as the tax rates in it are lower than the old one.
Income Tax Regime: Companies have issued Form 16 to their employees. Now salaried taxpayers can file income tax returns. Many taxpayers have filed ITR. To file returns, taxpayers are required to choose either the new or the old income tax scheme. Each regime has its own benefits. Accordingly, taxpayers can decide the regime on the basis of which regime is beneficial for them.
Major changes in the new tax regime in the 2023 budget
Finance Minister Nirmala Sitharaman made several major changes in the new tax regime in the Union Budget 2023. She had increased the basic exemption limit from Rs 50,000 to Rs 3 lakh. Apart from this, the rebate available under section 87A was increased. With this, people with an annual income of up to Rs 7 lakh do not need to pay tax in the new regime. Its purpose was to simplify tax calculations.
Tax-savings and its benefits need to be understood
Tax experts say that which regime is beneficial for you, new or old, can be decided on some parameters. For this, the taxpayer has to properly understand his potential income, potential deductions and available exemptions. The new regime is especially beneficial for those who do not do tax-saving or investment. On the other hand, the old regime is good for those who can invest.
New scheme beneficial for taxpayers with annual income up to Rs 7 lakh
Experts said that the new regime is beneficial for those whose annual income is up to Rs 7 lakh, because their tax liability becomes zero. If your income is up to Rs 7 lakh and you do not take advantage of deductions, then the new tax regime can be beneficial for you. If you have made a good investment in tax saving instruments, then the old tax regime will be right for you. This will reduce your tax liability. Experts also say that the decision of new and old tax policy will depend on how much your tax saving investment is.
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