This post was most recently updated on February 3rd, 2023
Are you confused between new and old tax regimes and not able to decide which one is beneficial for you? Use this New and old income tax regime comparison calculator online to decide which tax regime is best for you.
Consider reading – Income tax exemptions for salaried employees
Check here to understand the difference between old and new tax regime.
What is the New and old income tax regime in India?
There are two main income tax regimes in India: the old regime and the new regime. The old regime is the traditional income tax system that has been in place for many years in India, and it is based on the rates and slabs specified in the Income Tax Act. Under the old regime, taxpayers can claim various deductions and exemptions to reduce their taxable income.
The new regime, on the other hand, is a more simplified and liberal income tax system that was introduced in the 2020 budget. Under the new regime, taxpayers have the option to choose between the old regime and the new regime for the tax year. The new regime has lower tax rates and fewer deductions and exemptions compared to the old regime. However, it may not be suitable for all taxpayers, and it is important to carefully evaluate the pros and cons of both regimes before making a decision.
What are the tax slab rates in the New and old income tax regimes in India?
Tax rates in the old tax regime in India are as below:
|Taxable Income (INR)||Tax Rate|
|Up to 2,50,000||0%|
|2,50,001 to 5,00,000||5%|
|5,00,001 to 10,00,000||20%|
In the old tax regime, taxpayers can go for income tax exemptions and deductions.
Tax rates in the new tax regime updated with Budget 2023 tax slabs in India are as below:
|Taxable Income (INR)||Tax Rate|
|Up to 3,00,000||0%|
|3,00,001 to 6,00,000||5%|
|6,00,001 to 9,00,000||10%|
|9,00,001 to 12,00,000||15%|
|12,00,001 to 15,00,000||20%|
Please note that in the new tax regime, Taxable income up to INR 7,00,000 is tax-free.
Please note that these tax rates are applicable to individuals who are below the age of 60 years. For senior citizens (age 60 years or above but below 80 years) and very senior citizens (age 80 years or above), there are different tax rates and slabs.
It is also important to note that under the new tax regime, deductions and exemptions are not available. However, taxpayers can claim a standard deduction of INR 52,500 for salary income and INR 40,000 for pension income.
Which is best for saving the most tax between the new and old tax regimes?
If you want to save maximum tax then go for the old tax regime as it offers tax savings instruments using which you can save maximum tax. The new tax regime is for those people who do not want to put their money into tax savings instruments.
How do I use salary to tax calculator?
Effective FY 2020-21; you have 2 options for tax filings i.e. New tax regime and Old tax regime. Depending on which tax regime you opt for, your tax will be calculated accordingly.
In the above tax calculator, if you enter your salary and add the investments you have made, it will automatically suggest the best tax option for you.
New and old income tax regime comparison calculator
Updated New and old income tax regime comparison calculator in India after Budget 2023:
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FAQs on New and old income tax regime in India
Can I switch between the old and new regimes from one year to the next?
No, once you have chosen a particular tax regime for a particular financial year (April 1 to March 31), you are required to stick to it for that entire year. You cannot switch between the old and new regimes from one year to the next. However, you have the option to choose a different tax regime in the following year.
Are there any restrictions on who can opt for the new tax regime?
There are no restrictions on who can opt for the new tax regime. Any individual (including salaried employees, self-employed individuals, and pensioners) can choose the new tax regime if they wish to do so. However, it is important to carefully evaluate the pros and cons of both the old and new tax regimes before making a decision on which one to choose.
Can I claim deductions and exemptions under the new tax regime?
No, under the new tax regime, deductions and exemptions are not available. However, taxpayers can claim a standard deduction of INR 50,000 for salary income and INR 40,000 for pension income.