The ITR (Income tax Regime) filing season has come, and you must be wondering whether to move with the Old Tax or the new Tax Regime. There are many out there who are still confused about which Tax Regime to follow. The old tax gives the provision of tax-saving exemption, whereas the new Tax Regime doesn’t offer any such thing.
It is very important to know which Tax regime will be beneficial for you before filing it. Know all the pros and cons of both the Old and New Tax Regime.
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Old Tax Regime :
The old tax Regime offers multiple exemptions and deductions for a user, which is beneficial. Some of these exemptions are :
- Home Loan Interest
- Insurance Premium
- Saving Scheme
- HRA ( House Rent Allowance)
- Travel Allowance, etc.
Dedication under the Old Tax Regime :
- Section 80C: Investment Schemes like LIC, PPF, EPF, ELSS, with a total of 1.5 lakh
- Section 80D: Deduction of health Insurance.
- Section 80DD: Deduction of family member physically Handicapped
- Section 80G: Charity or donation
- Section 10(13A): HRA or rented house.
- LTA (Leave Travel Allowance): Tax exemption on travel expenses.
- Section 80E: Tax exemption on the entire interest paid on an Education loan. maximum 8 years
These exemptions help reduce the total taxable value of the salary.
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New Tax Regime :
Under section 115 BAC, the New Tax Regime was introduced. In this, there are no major exemptions or deductions available. As per the New tax Regime, there will be no tax till an annual salary of 12 lakh. Apart from this, there is a standard deduction of Rs 75,000 as benefits. This brings the total salary of non-taxable slabs to Rs 12.75 Lakhs.
Exemption available in the New tax system :
The majority of the Old Tax exemptions are not available in the New Tax. But some of them that are available in the new tax are :
- Section 80CCD(2): Exemption on NPS
- Section 80CCH: Exemption on pension fund.
- Section 80JJAA: Exemption for recruiting of new employees.
- Section 80CCH: Full deposited amount exemption in Agniveer Corpus Fund.
Know which one to choose, Old Tax or New Tax :
Only on the basis of your annual income and the investment plans, you will be able to find your best Tax Regime, so that you can check your exemption accordingly. If you have a majority of the exemption and investment plan, then the Old Tax is beneficial for you, else there is not much investment, then you should proceed with the New tax in order to avoid as much exemption as possible.