New Vs Old Tax Regime: To make the new tax regime effective, some big announcements can be made in the upcoming full budget. Income tax exemption can be given on investments like the old tax regime.
New Vs Old Tax Regime: The central government is also preparing to make the new tax regime attractive. It is being told that some big announcements can be made in the upcoming full budget to make the new tax regime effective. Like the old tax regime, income tax exemption can be given on investment. Discussions are also going on at a high level regarding this.
According to tax experts, till now, there is no tax on income up to Rs 7.5 lakhs on filing income tax returns in the new system. This also includes a standard deduction of Rs 50,000. Despite this, people are considering the old system to be more economical. Therefore, the government is also considering giving some additional exemptions in the new system. At present, more than 8.18 crore income tax returns are being filed in the country, in which about 85 percent people are still filing returns under the old system.
Income up to Rs 7 lakh is tax free
It is worth noting that the government brought a new tax system for income tax returns three years ago, in which income up to Rs 7 lakh was made tax free. Later, to attract taxpayers, this limit was made Rs 7.5 lakh by adding a standard deduction of Rs 50,000. But even after that, people are considering the old system to be better.
Which is better, old or new tax regime?
There are currently two types of tax regimes in the country – old and new. The old tax regime is good for those who are paying home loan EMIs or investing in life/health insurance or elsewhere. In this, one gets the benefit of tax exemption under Income Tax Section 80C. On the other hand, the new tax regime is good for those who have got a new job and who do not have any savings or liabilities. In this, there is no tax on income up to Rs 7.5 lakh.
Demand to increase investment limit in the old system
Since the year 2014, the central government has not increased the investment limit under Section 80C, whereas during this period the income of the people has increased. Due to the increase in retail inflation, the prices of food items have increased rapidly. Due to this, the savings of the people have also been affected due to increased expenditure on everyday items. CA Vineet Rathi says that in today’s time, the tax exemption limit on an investment of Rs 1.5 lakh is nothing. In such a situation, the investment limit under 80C should be increased to at least Rs 2.5 lakh.
Income tax slab of new tax regime
Rs 0-3 lakh 0%
Rs 3-6 lakh 5%
Rs 6-9 lakh 10%
Rs 9-12 lakh 15%
Rs 12-15 lakh 20%
More than Rs 15 lakh 30%
Income tax slab of old tax regime
Rs 0-2.5 lakh 0%
Rs 2.5- Rs 5 lakh 5%
Rs 5-10 lakh 20%
More than Rs 10 lakh 30%
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