Whether to continue existing payments towards insurance premium, provident fund etc. The relief however is that the new Regime is only optional and is totally at the wisdom of the assessee whether to choose it or not. The notable deductions/exemptions that would be unavailable in the new Tax Regime include standard deduction on salaries, housing loan interest, section 80C deductions (for insurance premium, P.F., tuition fees, etc.) etc. Under the New Tax Regime, the assessee shall not be entitled to most of the exemptions and deductions that a common taxpayers has relied upon extensively not only to make investments but also to plan and reduce his tax. But this lucrative New Tax Regime comes with a condition that many taxpayers would not appreciate. Going by the above table alone, its seems a perfect gift to the taxpayers where tax rates have been slashed and more tax brackets have been provided to reduce the tax burden. Unlike the existing tax regime consisting of three taxable slabs with minimum tax rate of 5% and highest being 30%, the New Tax Regime consists of five taxable brackets with minimum tax rate of 5% with 5% incremental rise for each higher tax brackets except for fifth slab where incremental rise is 10%.Ī comparative chart of the tax brackets and rates under both Regime is as under: Tax Brackets However the taxpayers shall have an optional to choose old regime. The Budget 2023-24 proposes to make the New Tax Regime u/s 115BAC as the default one. The Finance Bill 2020 (26 of 2020) has inserted new sections namely section 115BAC to introduce the new Scheme of Taxation on income of Individuals and HUFs.
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