Question: Which Income Tax Regime Is Better?

How do I choose an old or new tax regime?

Based on your net taxable income post exemptions/deductions, calculate total income tax under old as well as new regime.

Apart from taxable income, your lifestyle, life stage, short- and long-term priorities along with financial goals are excellent parameters to decide what type of tax regime you should opt for..

Can I change from new tax regime to old?

Effectively, you can switch between new and old tax regime at the time of filing ITR. … CBDT also clarifies that even if one opts for New Tax Regime and the same intimation is made to employer or Deductor, it shall be only for the purposes of TDS during the previous year and cannot be modified during that year.

Which deduction is still allowed for 2020?

Any deduction under chapter VIA (like Section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, and so on….Share article.Taxable Income SlabsTax RatesRs 10 lakh to Rs 12.5 lakh20%Rs 12.5 lakh to Rs 15 lakh25%Rs 15 lakh and above30%4 more rows•Feb 7, 2020

What is the new tax regime 2020?

Income tax slabs under the new tax regime for all individuals for FY 2020-21 (AY 2021-22)Income Tax SlabTax RateRs 5 lakh to Rs 7.5 lakh10%Rs 7.5 lakh to Rs 10 lakh15%Rs 10 lakh to Rs 12.5 lakh20%Rs 12.5 lakh to Rs 15 lakh25%3 more rows•Nov 5, 2020

How can I save tax on my new tax regime?

Want to invest and save tax in New Tax Regime? Here’s all you can doTax Talk: Taxability rules for capital gains of non-residents.Income Tax Act allows tax benefits up to Rs 2 lakh on NPS contributions: Know the eligibility.I-T Act change: Property sale at lower than circle rate to be exempt from tax.

Which income tax option is better?

“If the salaried individual is claiming deductions under section 80C, 80D (medical premium), HRA exemption, LTA exemption and deduction of interest paid on housing loan taken for self occupied property up to permissible limits, he is is likely to be better off in the existing personal tax regime,” said Shalini Jain, …

Should I opt for new tax regime?

New taxation regime is better for employees with less salary and less investments resulting in lesser deductions and exemptions. … This could include non-salaried taxpayers (including consultants) who are not eligible for exemptions and deductions under Chapter VI-A.

What deductions are not allowed in new tax regime?

The important tax breaks that will not be available under the new tax regime include Section 80C (Investments in PF, NPS, Life insurance premium, home loan principal repayment etc.), Section 80D (medical insurance premium), tax breaks on HRA (House Rent Allowance) and on interest paid on housing loan.

What is the 80c limit for 2020 21?

The maximum deductions available under a few sections are as follows: Section 80C to 80CCC: ₹ 1,50,000. Section 80CCD: ₹ 50,000. Section 80D: ₹ 30,000 for self, spouse and children, ₹30,000 for parents, ₹50,000 for senior citizens.

Is 80c applicable in new tax regime?

Under the new tax regime, an individual cannot avail tax benefit under section 80C on the contribution made to his/her PPF account. However, any interest accrued or maturity amount received from the PPF account continues to be tax-exempt in the new tax structure as well.

Who will benefit from new tax regime?

Finance Minister Nirmala Sitharaman said in her budget speech that a taxpayer earning Rs 15 lakh will save Rs 78,000 in tax under the new regime. However, this assumes that the taxpayer is not claiming any deduction at all. In reality, the standard deduction applies automatically to all salaried taxpayers.

Is the new tax regime better?

Although looking at the reduction in the tax rates, the first reaction would be that the new system looks better. However, with these cuts, someone with Rs 7.5 lakh income will have to pay Rs 25,000 and for those who are earning Rs 10 lakh income, the tax saving will be Rs 37,500.