Which tax regime is better, old or new?
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The "better" tax regime (old or new) depends entirely on an individual's specific financial situation, particularly their income level and the amount of deductions and exemptions they are eligible to claim.
Which is better, old or new regime?
Choosing between the Old and New Tax Regimes depends on your income level, deductions, and exemptions. For salaried individuals with minimal deductions, the New Regime is likely more beneficial due to relaxed tax slabs and a rebate up to ₹7 lakh or ₹12 lakh (based on updated 87A provisions).
What is the disadvantage of the new tax regime?
Disadvantages. The new tax regime does not allow exemptions. This will lead to an increase in the overall taxable amount of taxpayers. For taxpayers with income up to INR 15 lakhs, the new tax regime has lower income taxes but this is at the sacrifice of exemptions and deductions available under the previous tax regime ...
Is there any benefit for the old tax regime?
Old Tax Regime is beneficial to: Those with significant investments in tax-saving instruments. Individuals with high deductions and exemptions, like medical insurance, home loans, and children's education expenses.
Can NRI opt for old tax regime?
Residents, as well as non-residents, have the same tax slab rates. Both have the flexibility to choose between the existing tax regime and the new tax regime slabs. Each option offers distinct advantages and understanding them can help you make an informed decision that aligns with your financial goals.
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Which tax regime is better for NRIs?
The old tax regime features high slab rates and allows several deductions and exemptions. It includes the Section 80C, 80D, and home loan interest. The new tax regime offers low tax slabs with limited exemptions/deductions, simplifies compliance, and reduces planning flexibility.
Can I switch back to the old tax regime next year?
An individual with non business income can switch between the new and old tax regimes every year. Within the same year, again it is emphasized that the choice of old tax regime can be made only before the due date of filing the return u/s 139(1) of I T Act.
Is 12 lakh tax-free for old regimes?
12 Lakh are eligible for a rebate under Section 87A, making their tax liability zero. It is important to note that this tax liability is only valid for taxpayers who choose to forego exemptions and deductions such as HRA and LTA under the new tax regime.
How can I save tax in old regime?
You can reduce your tax liability in the old regime by claiming deductions under Section 80C (PPF, ELSS, LIC), 80D (health insurance), Section 24(b) (home loan interest), and exemptions like HRA, LTA, and education loans.
Is 80C allowed in old regime?
For the financial year 2025–26, individuals under the old tax regime can still claim deductions up to Rs. 1.5 lakh under Section 80C.
What happens if I choose a new tax regime?
The old regime allows various deductions and exemptions, while the new regime offers lower tax rates but no deductions. Key differences include tax rates and availability of deductions. Can I switch between the old and new tax regimes every year? Salaried individuals can switch annually by informing their employer.
How can I reduce my taxable income?
What to do at tax time
- Contribute to tax-advantaged retirement accounts to maximize deductions. Traditional IRAs, 401(k)s, 403(b)s, and 457(b)s accounts allow for a dollar-for-dollar reduction of taxable income for contributions made. ...
- Compare standard deduction to itemized deductions. ...
- Consider tax credits.
What is not allowed in the new tax regime?
Fewer Deductions: The new tax regime does not allow deductions such as HRA, LTA, Section 80C, , 80D, medical expenses, education loan interest, or investments in certain plans.
What are the disadvantages of the old tax regime?
What are the disadvantages of Old Tax Regime? One of the biggest disadvantage of the old tax regime is its complex tax structure that includes multiple exemptions and deductions. This can be challenging for taxpayers to understand and comply with.
Can I switch regimes every year?
Salaried taxpayers can switch regimes every financial year. Business and professional taxpayers can switch only once after opting for the new regime. After switching back to the old regime, the new one is barred unless business income ceases. Depreciation, losses, and deductions play a decisive role in this choice.
Which tax regime is better for a 35 lakh salary?
Under the old regime, the tax rate for income above Rs. 10 lakh is 30%. In the new regime, the rate is reduced to 15%, making it more beneficial for high-income earners. Life insurance can help reduce your tax liability through exemptions.
How to avoid 40% tax?
How to avoid paying higher-rate tax
- 1) Pay more into your pension. ...
- 2) Reduce your pension withdrawals. ...
- 3) Shelter your savings and investments from tax. ...
- 4) Transfer income-producing assets to a spouse. ...
- 5) Donate to charity. ...
- 6) Salary sacrifice schemes. ...
- 7) Venture capital investments.
How is 7.75 lakh tax-free?
How ₹7.5 lakh income is tax-free? In Budget 2023, the finance minister introduced a new simplified tax regime under which taxpayers with an annual income of up to ₹7 lakhs will not have to pay any tax. Additionally, the new regime has allowed a standard deduction of ₹75,000.
Can we save money in a new tax regime?
Key Features Before You Learn How to Save Tax in the New Tax Regime. To understand how to save tax in the new tax regime, it's essential to know its core structure: The basic exemption limit has increased to ₹12 lakh (effectively ₹12.75 lakh with standard deduction for salaried individuals).
Which regime is better for 12 LPA?
Old Regime remains unchanged with its slab rates and deductions. New Regime offers full exemption up to ₹12 lakh (₹12.75 lakh for salaried) in FY 2025-26, a major relief for middle-income taxpayers. Most deductions and exemptions (like 80C, HRA, 80D) are still not available in the new regime.
What is the new tax regime in 2025?
The income tax slab rates under the new tax regime for FY 2025–26 are as follows: income up to ₹4 lakh is tax-free; ₹4 lakh to ₹8 lakh is taxed at 5%; ₹8 lakh to ₹12 lakh at 10%; ₹12 lakh to ₹16 lakh at 15%; ₹16 lakh to ₹20 lakh at 20%; ₹20 lakh to ₹24 lakh at 25%; and income above ₹24 lakh is taxed at 30%.
How much does a CA charge to file an ITR?
ITR Filing Charges:
Salaried ITR Filing: ₹1,000/- Capital Gain / Share Gain-Loss ITR: ₹1,500/- Business ITR – 44AD Return: ₹2,000/-
Can we get a refund in an old tax regime?
Old Regime
A resident individual is having a total taxable income of less than Rs 5 Lakh, up to Rs. 12,500 rebate can be availed. But the rebate allowed shall not exceed the total tax payable before cess in any case.
Do we need to submit proof for new tax regime?
No, TDS (Tax Deducted at Source) is calculated based on the income declared by the employer in Form 16, along with the applicable tax slabs. The absence of a proof submission under the new regime does not affect TDS calculation. Employees will still have TDS deducted correctly by the employer.