WHICH TAX REGIME SHOULD YOU SELECT?

Tax planning

The New Regime has Lower Slab Rates and Fewer Exemptions than the Old Regime, which has Deductions and Exemptions. Employees must notify their employers of their preferred tax structure at the beginning of the new financial year.

WHY DO YOU HAVE TO OPT FOR A TAX REGIME? 

Because the CBDT (Circular no 04/2023) made it COMPULSORY for the Employers. Hence, employers are asking their employees for information about which income tax regime they wish to select. Accordingly, the employer will be deducting TDS. You must choose between the New and Old Tax Regimes; otherwise, the Employer will automatically deduct TDS in accordance with the New Tax Regime. The goal of TDS on Salary has no bearing on whether the taxpayer files an income tax return under the Old or New Income Tax Regime. It is modifiable during ITR filing.

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 the New Tax Regime might be better 

Old Tax Regime would be better if you have Rs 1.5 lakh of 80C Deduction and a Home Loan. 

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?

You can get tax deductions and exemptions under the old income tax regime. Comparatively speaking, the new tax system will make determining taxable income simpler. Additionally, the new tax system may assist you in reducing your taxes if you are unable to invest during the financial year.

Location: India

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