New vs Old tax regime: The income tax return filing time is here, and although it is early days yet, the Income Tax department has enabled the facility on its website. So, in case you wish, you can do your ITR filing, but ideally, you should ensure there are no discrepancies revealed at a later stage that you may have to deal with.
Another point that has increasingly come to the fore is the confusion in the minds of many income tax payers about whether to use the old tax regime or the new tax regime. Needless to say, a taxpayer should pick the regime depending on what is more beneficial. Here we take a look at a few points regarding your income tax slab for FY 2024-25 that can be helpful while doing your ITR filing.
First of all, as of this year, know that the government has made the new income tax regime as the default option. So, before you start doing any number crunching while doing your ITR filing, make sure you really want to use this new regime.
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The fundamental difference between the old tax regime and the new tax regime
The fundamental thing that differentiates the new income tax regime and the old income tax regime is the treatment accorded to the deductions and exemptions granted to the taxpayer. According to the old tax regime, the individual can lay claim to quite a few deductions that span Section 80C, Section 80D, and Section 80TTA of the Income Tax Act.
As far as the new tax regime is concerned, taxpayers can benefit from reduced tax rates, which is determined by their income bracket. However, this also means that those deductions available under the old tax regime will not be available.
Standard deduction
Standard deduction is Rs. 50,000 for both the old and new income tax regimes for the financial year 2024-2025.
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Income tax slabs under the new tax regime
* Up to Rs. 3 lakh income – No tax applicable.
* Rs. 3-6 lakh bracket will be taxed at 5 per cent (provision of tax rebate under Section 87A).
* Rs. 6-9 lakh income attracts a 10 per cent rate (tax rebate under Section 87A applicable for income up to Rs. 7 lakh).
* Rs. 9-12 lakh income bracket attracts 15 per cent tax rate.
* Rs. 12-15 lakh income attracts 20 per cent tax rate.
* Rs. 15 lakh and above income bracket attracts a 30 per cent tax rate.
Income tax slabs under the old tax regime
* Rs. 2.5 lakh income is tax exempt.
* Rs. 2.5 lakh to Rs. 5 lakh income will attract a rate of 5 per cent.
* Rs. 5 lakh to Rs. 10 lakh income attracts a 20 per cent tax rate.
* Rs. 10 lakh and over income attracts a 30 per cent tax rate.
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Inform your employer
If you are a conscientious income tax payer and want to get things done properly and well ahead of time, then you should indicate to your employer whether you prefer the old tax regime or the new tax regime. Of course, the IT department allows you to pick the regime of your choice at the time of filing your income tax return too.
Ideally, you should do the number crunching spanning both the old tax regime and the new tax regime and try and figure out the best option for yourself.
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