Who will benefit from the new tax regime?

Gefragt von: Olaf Winter

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The "new tax regime" is a common term for recent tax law changes in various countries, with the most significant recent reforms for individuals occurring in India and for businesses in the US (2025 Tax Reform Bill) and potentially Germany.

Who can benefit from the new tax regime?

With the revised brackets, individuals earning between Rs. 12 lakh and Rs. 24 lakh will see substantial tax savings, making the new tax regime more appealing for middle- and high-income earners. The changes aim to simplify tax compliance and offer financial relief to a broader section of taxpayers.

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 ...

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.

Is the new tax regime better than the old?

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).

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Can a salaried person change from a new regime to an old regime?

Once they opt out of new tax regime, they have only one chance for switching to new regime. Once they switch back to the new regime, they won't be able to choose old regime anytime in future. An individual with non business income can switch between the new and old tax regimes every year.

Can NRI opt for a new tax regime?

NRIs have the same tax slab rates as residents. Both NRIs and residents have the flexibility to choose between the old 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.

Do we get a refund in the new tax regime?

New Regime

For FY 2024-25, if an individual's total taxable income is up to Rs.7 lakh, he will be eligible for rebate up to Rs.25,000. However, for FY 2025-26, if an individual's total taxable income is up to Rs.12 lakh, he will be eligible for rebate up to Rs.60,000.

What are the benefits of new tax regime 2025?

For FY 2025–26, the new tax regime effectively makes income up to ₹12 lakh tax-free due to the enhanced rebate of ₹60,000. In addition, a standard deduction of ₹75,000 is available for salaried individuals, making a salary income of up to ₹12.75 lakh effectively tax-free.

Do you wish to opt out of the new tax regime?

Certainly, you can switch between tax regimes. If you are a salaried individual, you can switch every year. If you have income from business/profession, you will have to file Form 10IEA to opt for old regime. However, before doing so, keep in mind tax planning, long-term financial goals, and investments.

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.

Which regime is better for 30 LPA?

Key takeaway to save tax on salary above 30 Lakh

If you have significant tax-saving Tax deduction, opt for the old regime. Salaried employees could claim benefits like HRA, LTA, conveyance allowance, daily allowances, medical reimbursement, and *Tax deduction under Section 80C under the old regime.

What deductions can I claim in the new tax regime?

The new tax regime allows salaried people and senior citizens earning pensions a standard deduction of ₹75,000. Family Pension: If you have a family pension income, the new regime offers a deduction for it. You can claim a deduction of ₹25,000 or one-third of the pension amount, whichever is lower.

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).

How is 12 lakh tax free?

The new regime is beneficial as there is zero tax liability for income upto Rs. 12 lakhs for FY 2025-26. Can you pay zero tax on Rs 12 lakhs salary ? Yes , You can pay Zero tax on Rs 12 lakhs salary by claiming deduction and exemption like HRA exemption , 80C deduction , Standard deduction , Housing loan interest etc.

Can I claim 80C in the new tax regime?

Those following the new tax regime, however, will not be able to claim these deductions—making Section 80C relevant mainly for old regime taxpayers.

What happens if we select a new tax regime?

The new personal income tax regime introduced in the 2020 Union Budget is applicable to individual taxpayers in 2023. The new tax regime has reduced the prevailing tax rates, but some of the crucial deductions and exemptions allowed under the previous regime are no longer available.

What are the drawbacks of the new regime?

A key feature of the new regime is the limited scope for deductions. Taxpayers cannot claim most common deductions available under the old regime, including Section 80C (investments in LIC, PPF, ELSS, etc.), Section 80D (health insurance premiums), Section 80E (education loan interest), and House Rent Allowance (HRA).

What is the difference between a new tax regime and an old tax regime?

While the old tax regime can reduce your taxable income based on your savings and investment plans, the new tax regime can lower your income tax liability based on your income. If you haven't invested in any savings or investment plans, the new tax regime may be better suited for you.

How do I get the biggest refund on my taxes?

How to maximize tax return: 4 ways to increase your tax refund

Consider your filing status. Believe it or not, your filing status can significantly impact your tax liability. ...
Explore tax credits. Tax credits are a valuable source of tax savings. ...
Make use of tax deductions. ...
Take year-end tax moves.

Can I claim ITR in the new tax regime?

You can switch between the new and old tax regimes every year while filing your ITR. You don't need any additional forms; the option is available within the ITR form itself.

At what income level is the new tax regime better?

If your income is ₹30 lakhs and your deductions are less than ₹3.75 lakhs, the new tax regime will likely offer more savings. Otherwise, the old regime may be the better choice.

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.

Who cannot opt for the new tax regime?

If an individual only has a business or professional source of income, the option to revert to the old regime isn't available, the individual has to pay tax under the new regime.

What is the 90% rule for non-residents?

What is the 90% Rule? In a nutshell, the 90% rule is simple: if 90% or more of your worldwide income is from Canadian sources in the tax year, you're eligible for non-refundable tax credits reserved for residents.