Are you confused which tax regime to choose amid tweaks announced in the recently tabled Union Budget 2024? Here are answers to concerns regarding tax structure in the old and new tax regimes after Finance Minister Nirmala Sitharaman brought in changes to tax slabs and standard deduction.
Tax slabs under new tax regime
- Income under 3 lakh: Nil
- Between Rs 3 lakh and Rs 7 lakh: 5 per cent
- Between Rs 7 lakh and Rs 10 lakh: 10 per cent
- Between Rs 10 lakh and Rs 12 lakh: 15 per cent
- Between Rs 12 lakh and Rs 15 lakh: 20 per cent
- Income above Rs 15 lakh: 30 per cent
Tax slabs under old tax regime
- Income under Rs 2.5 lakh: Nil
- Between Rs 2.5 lakh and Rs 5 lakh: 5 per cent
- Between Rs 5 lakh and Rs 10 lakh: 20 per cent
- Income above Rs 10 lakh: 30 per cent
Standard deduction
New tax regime: In the latest Budget, the standard deduction for the new tax regime has been increased from the earlier Rs 50,000 to Rs 75,000.
Old tax regime: Standard deduction under old tax regime remains unchanged.
Verdict: If you are earning Rs 7.75 lakh annually, then you don't have to pay tax under the new regime as per latest proposal. But if you opt for old regime, you have to pay Rs 59,800.
Standard deduction + Section 80 C
New tax regime: No deduction available under 80 C
Old tax regime: Salaried individuals can claim deduction of up to Rs 1.5 lakh with investments in EPF, PPF, ELSS mutual funds, tax-saving bank FDs and education fees of children.
Verdict: If you are earning Rs 7.75 lakh annually, then you don't have to pay tax under the new regime as per latest proposal. But if you opt for old regime, you have to pay Rs 28,600.
Standard deduction + Section 80 C + HRA + NPS
New tax regime: No HRA deduction; Up to Rs 50,000 deduction on employer's contribution to NPS
Old tax regime: Besides NPS deduction, the old tax regime, 20 per cent of an employee's gross salary is exempt from tax under HRA.
Verdict: If you are earning Rs 15,00,000 annually, you have to shell out Rs 1,30,000 tax under newly tweaked new regime. Under old regime, you have to pay Rs 1,17,000 as tax, which is Rs 13,000 less than new regime.
Hence, it is important to choose whether old or new tax regimes are beneficial for you based on your income.
