WHICH TAX REGIME SHOULD YOU SELECT? ARE YOU CONFUSED?



Old Regime has Deductions and Exemptions but the New Regime has Lower Slab Rates and Fewer Exemptions. When the fiinancial year begins, employees must inform their employers of their chosen tax structure. 

WHY DO YOU HAVE TO OPT FOR A TAX REGIME? 

Employers are seeking information from their Employees on which regime they wish to opt for because CBDT (Circular no 04/2023) made it COMPULSORY for the Employers. Employer will be deducting TDS accordingly. You have to select between the New and Old Tax Regime, else the Employer will take the New Tax Regime as DEFAULT and deduct TDS accordingly. Whether you choose Old or New Income tax regime, the purpose of TDS on Salary has no impact on filing Income tax return by the assessee. You can change it while filing your ITR.

TIPS ON WHICH IS THE RIGHT TAX REGIME FOR YOU 

  • For Income up to Rs 7 lakh the New Tax Regime is better 
  • In case you don’t have Tax savings and Deductions to avail then consider the New Tax Regime 
  • In case you have just Rs 1.5 lakh of 80C Deduction then New Tax Regime might be better 
  • In case you have Rs 1.5 lakh of 80C Deduction and also a Home Loan, Old Tax Regime be better for you. 
  • In case you have an HRA Deduction to claim, the Old Tax Regime might be better for you. 

OPTING FOR OLD OR NEW TAX REGIME, WHICH IS WISER?

The old tax regime will provide you with the tax exemptions and deductions. New tax regime will make calculating taxable income comparatively easier. And if you are unable to make investments during the financial year, then the new tax regime will help you in lowering tax outgo.

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