Budget 2024: In the Budget, Finance Minister Nirmala Sitharaman did not make any changes in the old tax regime but increased the exemption limit in the new tax regime, making it more advantageous than before. Following the announcements made by the Finance Minister in Budget 2024, taxpayers are now uncertain about which regime to choose. If you are also a taxpayer, we will explain all the calculations to help you decide. Here’s a detailed breakdown to help you understand which regime might be more beneficial for you.
Choose new tax regime if your income is low
The standard deduction in the new tax regime has been increased from Rs 50,000 to Rs 75,000. Tax experts suggest that if you are not claiming a deduction of up to Rs 2 lakh on home loan interest or do not qualify for a substantial house rent allowance (HRA), it would be more beneficial to switch to the new, simplified tax system. Without these deductions, the old tax system may not be advantageous.
Proposed tax structure under new tax system
- 0-3 lakh: Nil
- 3-7 lakh: 5%
- 7-10 lakh: 10%
- 1-12 lakh 15%
- 12-15 lakh 20%
- Above 15 lakh: 30%
Choose the old tax regime if your income is high
If your income is high, opting for the old tax regime will be beneficial. For instance, a salaried employee with an income of Rs 11 lakh who claims deductions exceeding Rs 3,93,750 would save more under the old tax regime. Although it may be challenging for someone earning Rs 11 lakh to claim this level of deductions, dual-income couples might manage to afford higher deductions. The old tax regime allows tax exemptions on health insurance premiums, children's school fees, investments under Section 80C, home loan interest, and house rent. Therefore, if your expenses align with these categories, the old tax regime will be more advantageous for you.
Also Read: Budget 2024 announcements on new tax regime: Standard deduction increased, check new tax slabs
Also Read: Agriculture Budget 2024: Nirmala Sitharaman announces big agri push, allocates Rs 1.52 lakh crore
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