The tax regime defines the tax slabs and rates. In 2020 the government introduced a new tax regime with higher tax rates but more options for tax savings. The new tax regime also gives taxpayers the option to select either old or new regimes making taxation all the more complicated. While figuring out what option to go for might look complicated, if you approach it systematically, it is not that difficult to figure out.
- Calculate all the exemptions available
- Check out the deductions that you can claim
Accordingly, different taxpayers will benefit differently under the 2 tax regimes. One thing that taxpayers need to be careful of is tax regimes should not take precedence over life goals. For instance, it is you who should decide whether to invest your money or to go for insurance depending on your needs.
Current Tax Regime Table
The current tax regime table is as follows:
|Old Tax Regime (With deductions and exemptions)||Total Income||New Tax Regime (Without deductions and exceptions)|
|Nil||Up to Rs. 2.5 Lakh||Nil|
|5%||From Rs 2,50,001 to Rs 5 Lakh||5%|
|20%||From Rs 5,00,001 to Rs 7.5 Lakh||10%|
|From Rs 7,50,001 to Rs 10 Lakh||15%|
|30%||From Rs 10,00,001 to Rs 12.5 Lakh||20%|
|From Rs 12,50,001 to Rs 15 Lakh||25%|
|From Rs 15,00,001 and above||30%|
Frequently Asked Questions
Which Tax Regime is better?
There is no easy way to answer this, as taxpayers will need to evaluate and compare both the tax regimes and then decide which one to choose. But keeping in mind multiple factors like investment in tax savings instruments, it’s better to opt for the old tax regime as it offers benefit of deduction/exemption.
How to opt for New Tax Regime?
To opt for the New Tax Regime, individuals with business income will have to fill Form 10IE only once in their lifetime. While salaried individuals will have to file Form 10IE every year to continue with the New Tax Regime.