Filing income tax returns can be a tedious and confusing task, especially with the introduction of a new income tax regime. The new tax regime was introduced in 2020 and offers lower tax rates but without the benefit of certain deductions and exemptions. To help taxpayers make an informed decision, a new and old income tax regime comparison calculator has been developed.
This calculator is a useful tool that allows taxpayers to compare the tax liability under the old and new regimes and choose the one that is most beneficial for them. In this article, we will explore the features and benefits of using a new and old income tax regime comparison calculator.
We will also discuss how this tool can help you make an informed decision and save money on taxes. Whether you’re a salaried individual or a business owner, the new and old income tax regime comparison calculator can simplify your tax planning process.
Read on to learn more about how to use this New and Old Income Tax Regime Comparison Calculator and make the most of the tax benefits available to you.
Consider reading – Income tax exemptions for salaried employees
New and Old Income Tax Regime Comparison Calculator – Overview of Income Tax Regimes
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.
Check here to understand the difference between the old and new tax regime.
What are the Tax Slab Rates in the New and Old Income Tax Regimes in India?
The 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.
The 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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Final Thoughts on New and Old Income Tax Regime Comparison Calculator
In the ever-evolving financial landscape of India, the distinction between the new and old income tax regimes stands out. Both regimes have their merits, tailored to suit different taxpayer profiles.
While the old system offers a myriad of deductions and exemptions, the new regime simplifies the structure with reduced tax rates and minimal exemptions. As taxpayers, it’s imperative to be informed and make a choice that aligns with our financial goals.
Use our New and Old Income Tax Regime Comparison Calculator to check which regime is best for you and how much tax you can save.
Remember, understanding the nuances between the new and old income tax regimes can lead to informed decisions, ensuring you make the most of your hard-earned money.
Keep abreast of the latest updates and consider consulting a tax expert if in doubt. After all, when it comes to taxation in India, knowledge is not just power—it’s savings!
FAQs on New and Old Income Tax Regime Comparison Calculator
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.
How to compare old vs new tax regime calculator?
To compare old vs new tax regime calculator, you can follow these steps: 1. Gather your income details and tax deductions for both regimes. 2. Use an online tax calculator that supports both old and new slabs. 3. Enter your income and deductions in the calculator. 4. Compare the tax liability for both regimes and assess the difference. This will help you understand the impact of the new tax regime on your finances.
Which income tax regime is better old or new?
The new tax regime, as per the revisions in the Union Budget 2023, is designated as the default. However, taxpayers can choose the old tax regime if they prefer. It is important to note that the new system does not allow for various exemptions and deductions, such as HRA, LTA, 80C, 80D, etc. Ultimately, the choice between the old and new regime depends on individual circumstances and financial goals.
What is the tax rate for 40 lakh salary?
The tax rate for a salary of ₹40 lakh in India is 38.3%. This means that if you earn ₹4,000,000 per year, your net pay will be ₹2,467,000, or ₹205,583 per month, after deducting ₹1,533,000 in taxes. The marginal tax rate for this income level is 43.2%