From the Financial year 2020-21, a new change was brought in the levying taxes-New Tax Regime method. In the new tax regime, the tax rates were reduced slightly though many of the deductions and exemptions were removed that were available under the old tax regime.
Further, the government gave the taxpayers a choice to opt for any of them (new/old). This got many of the taxpayers stuck between the choice of a more beneficial tax regime.
Don’t worry and stay relaxed!! We have made it easier for you. You just need to enter your income details and all computations as recommended by the tool and a detailed comparison of tax payments under both the regimes wil be shared on your screen.
Please share if you found this helpful - We'd greatly appreciate it.
Income
F.Y. 2022-23
Old regime
F.Y. 2022-23
New regime
F.Y. 2023-24/
2024-25
Old regime
F.Y. 2023-24/
2024-25
New regime
Income from Salaries
Amount
Amount
Amount
Amount
Less: Allowances & Exemptions
Amount
Amount
Amount
Amount
Income from Business
Amount
Amount
Amount
Amount
Income from House Property
Amount
Amount
Amount
Amount
Income from Other Sources
Amount
Amount
Amount
Amount
Deductions
F.Y. 2022-23
Old regime
F.Y. 2022-23
New regime
F.Y. 2023-24/
2024-25
Old regime
F.Y. 2023-24/
2024-25
New regime
Basic Deductions (80C)
Amount
Amount
Amount
Amount
Medical Insurance Premium (80D)
Amount
Amount
Amount
Amount
Interest from Savings (80TTA)
Amount
Amount
Amount
Amount
Other Deductions
Amount
Amount
Amount
Amount
Standard Deduction / Allowance
Amount
Amount
Amount
Amount
Budget Impact
F.Y. 2022-23
Old regime
F.Y. 2022-23
New regime
F.Y. 2023-24/
2024-25
Old regime
F.Y. 2023-24/
2024-25
New regime
Basic Tax
Amount
Amount
Amount
Amount
Marginal Relief
Amount
Amount
Amount
Amount
Rebate u/s 87a
Amount
Amount
Amount
Amount
Surcharge
Amount
Amount
Amount
Amount
Education Cess
Amount
Amount
Amount
Amount
Total Tax Liability
Amount
Amount
Amount
Amount
Impact of Budget 2024 comparedto F.Y.2022-23
Amount /-
Amount/-
Amount/-
Amount/-
File ITR Now
Contents
- Whatis the New Tax Regime?
- Whyhas the Government introduced the new tax regime?
- Whichare exemptions/deductions unavailable under the new tax regime?
- Whichexemptions and deductions are still available under the new tax regime?
- Whichtax slab is better?
- Isthere a situation of paying the same tax under both tax regimes?
- Whatare the benefits or disadvantages of opting for both tax regimes?
- FrequentlyAsked Questions
Budget 2024 Updates
In the 2024 interim budget, no changes were made to taxation for FY 2024-25. Finance Minister Nirmala Sitharaman retained existing tax rates for direct and indirect taxes, i.e., the changes announced for FY 2023-24 will be continued. A full budget is anticipated in July after the new government is formed post Lok Sabha elections.
What is the New Tax Regime?
A new tax slab has been introduced in Budget 2020 that got effective from 1 April 2020.This new income tax slab offered lower tax rates but deductions and exemptions will notbe available under the new regime except deduction u/s 80CCD(2). It allows you to loweryour tax liability subject to certain conditions and is optional.
Budget 2023 announced several amendments to make the new tax regime more lucrative, thefollowing key changes were introduced:-
Default Regime:- New tax regime is set as a default regime which means if youhaven’t informed your employer about which regime to choose from, the TDS calculationwill be done basis on the new tax regime only.
Tax Rate:- The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakhto make the new tax regime more attractive. Also, the highest tax rate of 30% will belevied above Rs 15 lakh income.
Rebate Limit:- The rebate under section 87A has been hiked to Rs 7 lakh from Rs 5lakh under the new tax regime. The rebate benefit will be up to Rs 25000, providedincome doesn't exceed the limit of 7 lakhs.
Standard Deduction:- Individuals having salary income can claim a standarddeduction of Rs. 50,000 from their gross salary income. Family pensioners opting for thenew tax regime can claim a standard deduction of Rs 15,000 from their pension income.
Slashed the surcharge limit:- Reduction in the surcharge on annual income above 5crores from 37% to 25% under the new regime. The highest tax rate is 42.74%, which wouldslash the maximum tax rate to 39% after this reduction.
Leave encashment exemption:- The limit of Rs. 3 lakh for tax exemption on leaveencashment on non-government salaried employees has been raised to Rs. 25 lakh.
Insurance plans:- As per the announcement in the Budget 2023-24, income fromtraditional insurance policies where the premium is more than Rs 5 lakh will not betax-free.
Tax Slabs:- The new tax regime has reduced the income tax slabs from 6 to 5. Therevised tax structure as per the new tax regime is:-
Income Tax Slab Rate for New Tax Regime
| Range of Income | Tax Rate |
|---|---|
| Upto 3,00,000 | Nil |
| 3,00,000-6,00,000 | 5% |
| 6,00,000-9,00,000 | 10% |
| 9,00,000-12,00,000 | 15% |
| 12,00,000-15,00,000 | 20% |
| Above 15,00,000 | 30% |
Comparison Of Old v/s New Tax regime Slab Rates
| Income Tax Slab | Old Tax Regime FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25) | New tax Regime (Before budget 2023) (until 31st March 2023) | New Tax Regime (After Budget 2023) (Applicable from 1st April 2023) |
|---|---|---|---|
| ₹0 - ₹2,50,000 | - | - | - |
| ₹2,50,001 - ₹3,00,000 | 5% | 5% | - |
| ₹3,00,001 - ₹5,00,000 | 5% | 5% | 5% |
| ₹5,00,001 - ₹6,00,000 | 20% | 10% | 5% |
| ₹6,00,001 - ₹7,50,000 | 20% | 10% | 10% |
| ₹7,50,001 - ₹9,00,000 | 20% | 15% | 10% |
| ₹9,00,001 - ₹10,00,000 | 20% | 15% | 15% |
| ₹10,00,001 - ₹12,00,000 | 30% | 20% | 15% |
| ₹12,00,001 - ₹12,50,000 | 30% | 20% | 20% |
| ₹12,50,001 - ₹15,00,000 | 30% | 25% | 20% |
| More than ₹15,00,000 | 30% | 30% | 30% |
Why has the Governmentintroduced the new tax regime?
Increasing the tax slabs and lowering the tax rates were demanded for a long time. TheGovernment thus introduced a new tax regime to allow taxpayers to pay the lowest tax ontheir incomes. Since the new regime is optional, taxpayers can compare and choose themore beneficial regime in lowering their tax outgo. Under the new tax regimeapproximately 70 out of 100 exemptions are not available as here the government'sintention was to make tax filing simple and easier for taxpayers so that they cancalculate their tax liability themselves in an easy manner.
Which arethe exemptions/deductions unavailable under the new tax regime?
The budget has removed 70 of the available 100 exemptions. The following exemptions anddeductions are some of the most important ones which would not be available if the newtax slab is chosen for tax calculation –
- Standard deduction of INR 50,000 from salary income under Section 16
- House Rent Allowance under Section 10 (13A)
- Leave Travel Allowance under Section 10(5)
- Allowances under Section 10(14)
- Food coupons and other tax-free allowances and perquisites
- Deductions under Chapter VI A of the Income Tax Act like Section 80C, 80D, 80TTA,etc.
- Deduction for home loan interest paid for self-owned house property under Sections24 (b) and Section 80EEA
For more details pls check here. https://tax2win.in/guide/income-tax-slab-rates-updated
Which exemptions and deductions are still available under the new tax regime?
The following deductions and exemptions are still available under the new tax regime –
- Employer’s contribution to the NPS for up to 10% of employee’s salary under Section80CCD (2) [ 14% in case of Govt employee]
- Standard deduction of 30% from net rental income if house property is let out.
- Home loan interest paid can be deducted from the rental income of a house property.However, loss from the House Property head can not be removed from any other incomehead.
- Transport allowance exemption will be available to divyang employees to meet theday-to-day travel expenses from the workplace to home.
- Conveyance allowance will be allowed to meet the expenditure on the conveyance forthe purpose of performing the official duty.
- Allowances granted will be allowed to meet the cost of traveling on tour or ontransfer to the employees.
- Daily allowance granted for day-to-day ordinary expenses in case of absence from his/ her normal place of duty.
- Standard deduction of INR 50,000 from salary income under Section 16 as introducedby Budget 2023
Which tax slab is better?
Ever since the new tax regime was proposed, many are debating as to which tax regime isbetter, the old one with deductions or the new one without them? The answer is relative.One tax regime cannot be universally beneficial for all. Your income, its type,available deductions, and exemptions determine which tax regime would give you bettertax benefits. You should calculate your tax liability using both regimes, and the regimewhich gives you the lowest tax liability should be chosen depending on yourrequirement.
Here are some calculations showing you the tax liability under both thetax slabs for different types of incomes –
Salary Income of INR 12 lakhs for a salaried employee
| Particulars | FY 2023-24 | FY 2022-23 | ||
|---|---|---|---|---|
| Old Regime | New Regime | Old Regime | New Regime | |
| Gross Salary | 12,00,000 | 12,00,000 | 12,00,000 | 12,00,000 |
| Less: HRA exemption | 2,00,000 | NA | 2,00,000 | NA |
| Less: LTA exemption | 50,000 | NA | 50,000 | NA |
| Less: Standard deduction | 50,000 | 50,000 | 50,000 | NA |
| Less: Section 80C deductions | 1,50,000 | NA | 1,50,000 | NA |
| Less: Section 80D deductions for self | 25,000 | NA | 25,000 | NA |
| Less: Section 80D deduction for senior citizen parents | 50,000 | NA | 50,000 | NA |
| Less: Other deductions | 10,000 | NA | 10,000 | NA |
| Taxable Income | 6,65,000 | 11,50,000 | 6,65,000 | 12,00,000 |
| Tax Payable including cess (considering age is less than 60) | 47,320 | 85,800 | 47,320 | 1,19,600 |
| Remark | Old regime is beneficial | Old regime is beneficial | ||
Let us understand with another example :
| Particulars | FY 2023-24 | FY 2022-23 | ||
|---|---|---|---|---|
| Old Regime | New Regime | Old Regime | New Regime | |
| Gross Salary | 12,00,000 | 12,00,000 | 12,00,000 | 12,00,000 |
| Less: Standard deduction | 50,000 | NA | 50,000 | NA |
| Less: 80C deductions | 50,000 | 50,000 | 50,000 | NA |
| Taxable Income | 11,00,000 | 11,50,000 | 11,00,000 | 12,00,000 |
| Tax Payable including cess(considering age is less than 60) | 1,48,200 | 85,600 | 1,48,200 | 1,19,600 |
So, a salaried employee can benefit from the old tax regime by claiming exemptions/deductions. In case the taxpayer wants to claim more exemptions/ deductions, then heshould opt for the old tax regime subject to other conditions. You can readmore here.
In the second example, since the exemptions/ deductions available to him were lower ascompared to the previous example, it was more beneficial for him in opting for the newtax regime. Further, the decision of a suitable tax regime depends on case to case.
Some more examples showing taxability at different income levels:
SalaryIncome: Rs.5,00,000 FY 2022-23
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 500,000 | 500,000 | |
| Less : | Std. Ded. | 50,000 | - |
| 80C,80D, etc. | Zero | - | |
| HRA | Zero | - | |
| LTA | Zero | - | |
| Net Taxable Income | 450,000 | 500,000 | |
| Tax | - | - | |
Note: There is NO impact on tax payments because of rebate u/s 87A.
Salary Income: Rs.5,00,000 FY 2023-24
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 500,000 | 500,000 | |
| Less: | Std. Ded. | 50,000 | 50,000 |
| 80C,80D, etc. | Zero | - | |
| HRA | Zero | - | |
| LTA | Zero | - | |
| Net Taxable Income | 450,000 | 450,000 | |
| Tax | - | - | |
Note: There is NO impact on tax payments because of rebate u/s 87A.
Salary Income: Rs.7,00,000 FY 2022-23
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 700,000 | 700,000 | |
| Less: | Std. Ded. | 50,000 | - |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 50,000 | - | |
| LTA | Zero | - | |
| Net Taxable Income | 450,000 | 700,000 | |
| Tax | 0 | 33,800 | |
| Note: There is NO impact on tax payments under theold regime because of rebate u/s 87A. However Tax is payable under thenew regime therefore the Old regime is more beneficial. | |||
Salary Income: Rs.7,00,000 FY 2023-24
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 700,000 | 700,000 | |
| Less : | Std. Ded. | 50,000 | 50,000 |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 50,000 | - | |
| LTA | Zero | - | |
| Net Taxable Income | 450,000 | 650,000 | |
| Tax | 0 | 0 | |
| Note: There are tax payments under the old regime dueto rebate u/s 87A and also under new regime also due to rebate u/s 87Aas Introduced by Budget 2023 which says Income upto 7 lac is not taxableunder the new Regime. | |||
Salary Income: Rs.7,00,000 FY 2022-23
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 700,000 | 700,000 | |
| Less : | Std. Ded. | 50,000 | - |
| 80C,80D, etc. | - | - | |
| HRA | - | - | |
| LTA | - | - | |
| Net Taxable Income | 650,000 | 700,000 | |
| Tax | 44,200 | 33,800 | |
| Note: New Tax Regime is more beneficial. | |||
Salary Income: Rs.7,00,000 FY 2023-24
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 700,000 | 700,000 | |
| Less : | Std. Ded. | 50,000 | 50,000 |
| 80C,80D, etc. | - | - | |
| HRA | - | - | |
| LTA | - | - | |
| Net Taxable Income | 650,000 | 650,000 | |
| Tax | 44,200 | 0 | |
| Note: Tax payable under old regime is Rs 44,200however there is tax payments under New regime because of rebate u/s 87Aas Introduced by Budget 2023 which says Income upto 7 lac is not taxableunder the new Regime. | |||
Salary Income: Rs.8,00,000 FY 2022-23
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 800,000 | 800,000 | |
| Less : | Std. Ded. | 50,000 | - |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 50,000 | - | |
| LTA | Zero | - | |
| Net Taxable Income | 550,000 | 800,000 | |
| Tax | 23,400 | 46,800 | |
| Old Tax Regime saves more tax. | |||
Salary Income: Rs.8,00,000 FY 2023-24
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 800,000 | 800,000 | |
| Less : | Std. Ded. | 50,000 | 50,000 |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 50,000 | - | |
| LTA | Zero | - | |
| Net Taxable Income | 550,000 | 750,000 | |
| Tax | 23,400 | 31,200 | |
| Old Tax Regime saves more tax. | |||
Salary Income: Rs.15,00,000 FY 2022-23
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 1,500,000 | 1,500,000 | |
| Less : | Std. Ded. | 50,000 | - |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 75,000 | - | |
| LTA | 20,000 | - | |
| Net Taxable Income | 1,205,000 | 1,500,000 | |
| Tax | 180,960 | 195,000 | |
| Old Tax Regime saves more tax. | |||
Salary Income: Rs.15,00,000 FY 2023-24
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 1,500,000 | 1,500,000 | |
| Less : | Std. Ded. | 50,000 | 50,000 |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 75,000 | - | |
| LTA | 20,000 | - | |
| Net Taxable Income | 1,205,000 | 1,450,000 | |
| Tax | 180,960 | 145,600 | |
| New Tax Regime saves more tax. | |||
Salary Income : Rs.20,00,000 FY 2022-23
| Particulars | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | 2,000,000 | 2,000,000 | |
| Less : | Std. Ded. | 50,000 | - |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 75,000 | - | |
| LTA | 20,000 | - | |
| Net Taxable Income | 1,705,000 | 2,000,000 | |
| Tax | 336,960 | 351,000 | |
| Old Tax Regime saves more tax. | |||
Salary Income : Rs.20,00,000 FY 2023-24
| Old Regime | New Regime | ||
|---|---|---|---|
| Gross Income | 2,000,000 | 2,000,000 | |
| Less : | Std. Ded. | 50,000 | 50,000 |
| 80C,80D, etc. | 150,000 | - | |
| HRA | 75,000 | - | |
| LTA | 20,000 | - | |
| Net Taxable Income | 1,705,000 | 1,950,000 | |
| Tax | 336,960 | 296,400 | |
| New Tax Regime saves more tax. | |||
Is there asituation of paying the same tax under both tax regimes?
Let's get a brief over some of the indifferent points between the old and new taxregimes:
For FY 2022-23
| Gross Income | Deductions and exemptions including Standard deduction | Tax under the old tax regime* | Tax under the new tax regime* |
|---|---|---|---|
| INR 8,00,000 | INR 1,38,000 | INR 47,000 | INR 47,000 |
| INR 10,00,000 | INR 1,88,000 | INR 78,000 | INR 78,000 |
| INR 12,00,000 | INR 1,91,000 | INR 1,20,000 | INR 1,20,000 |
| INR 15,00,000 | INR 2,50,000 | INR 1,95,000 | INR 1,95,000 |
*Tax amount has been rounded off to the nearest thousands
For FY 2023-24
| Gross Annual Income | Deductions and exemptions including Standard deduction | Tax under the old tax regime* | Tax under the new tax regime* |
|---|---|---|---|
| INR 8,00,000 | INR 2,12,500 | INR 31,000 | INR 31,000 |
| INR 10,00,000 | INR 3,00,000 | INR 55,000 | INR 55,000 |
| INR 12,00,000 | INR 3,50,000 | INR 86,000 | INR 86,000 |
| INR 15,00,000 | INR 4,08,000 | INR 1,46,000 | INR 1,46,000 |
*Tax amount has been rounded off to the nearest thousands
In the cases mentioned above, the taxpayer will be indifferent to both schemes. Bothschemes will result in approximately the same amount of tax.
What are thebenefits or disadvantages of opting for both tax regimes?
The various benefits or disadvantages of the old and new tax regimes include:-
| Benefits | Disadvantages |
|---|---|
| OLD TAX REGIME | |
| Option to avail around 70 exemptions and deductions underthe Income Tax Act | Investment only in specified options were required to claim the taxbenefit. |
| Practice to submit false disclosures for investment proofs is prevalent | |
| NEW TAX REGIME | |
| Tax Rates Reduced | Not attractive to those who were already investing and havebinding premiums |
| No major tax saving options given, increasing cash flow in hands oftaxpayer | |
The bottom line
The bottom line comes down to numbers. Before deciding on whichregime is suitable for you, you need to calculate your tax liability under both regimeswith and without deductions and exemptions. The regime which gives you the lowest taxliability would be better depending on your requirements. Mrs. Sitharaman has given youthe choice of reducing your tax liability in any way possible and so, the onus is on youto find out which regime works better for you.
FAQs on the Old Vs New Tax Regime
Q- Can I switch between the old and new tax regime?
Yes, a salaried individual can make a choice every year as to which tax regime should bechosen. There is no compulsion if one scheme is selected for a year then it should adhereevery year. Taxpayers can switch amongst the schemes yearly.
Q- Is the new tax regime more beneficial?
New tax regime is more beneficial, particularly for those who have yet to invest and are notlooking forward to investing in tax-saving options eligible under the old scheme. Thisoption is more lucrative for new joiners or senior citizens willing to have more liquidityin their hands compared to investments.
Q- Can I claim deductions under both the old and new tax regimes?
No, you cannot claim deductions under both the old and new tax regimes for the same financialyear. You need to choose either the old or the new tax regime for a particular financialyear.
Q- Is the HRA benefit available under the new tax regime?
House Rent Allowance or HRA exemption is not available under the new tax regime pronounced inBudget 2020.
Q- How to calculate tax for the new regime?
Tax under the new regime can be calculated as per the income tax slabs rates prescribed orwith the help of an income tax calculator.
Q- Whether rental income earners should shift to the new taxregime?
The choice of opting for the new tax regime depends on your willingness to make tax savinginvestments. In case you are a rental income earner and you are not looking forward tomaking any tax-deductible contributions, then opt for the new tax regime. Still, it would besuggested to take a more informed decision by calculating your tax liability under bothregimes.
Mobile Validation
Invalid OTP or Account does not exists
