presentation on new tax regime

New Tax Regime: What Is It? How Can You Opt For It? Comparison With Old One

Finance ministry said taxpayers continue to have the option of choosing the tax regime of their choice at the time of filing their itr..

The Finance Ministry today said that there is no change in the new Income Tax regime for individuals in the financial year 2024-25, starting today. It added that taxpayers continue to have the option of choosing the tax regime of their choice at the time of filing their ITR.

"Although, the new tax regime is the default tax regime, taxpayers can choose the tax regime that they think is beneficial to them. The option for opting out from the new tax regime is available till filing of return for the assessment year (AY) 2024-25," the ministry said.

New Tax Regime: What is it?

The new tax regime was announced as the default tax regime by Union Finance Minister Nirmala Sitharaman in Union Budget 2023-24.

Under this, the basic exemption limit was hiked to Rs 3 lakh from Rs 2.5 lakh, while the rebate under Section 87A of the Income Tax Act, 1961, was increased from Rs 5 lakh to Rs 7 lakh.

As a result, individuals who have income up to Rs 7 lakh per year will get a full tax rebate under the new tax regime, absolving them from paying any income tax. 

How to opt for it?

For individuals other than companies and firms, the new tax regime is the default regime from the financial year 2023-24 and the assessment year corresponding to this is AY 2024-25.

The new tax regime automatically applies unless an individual takes specific action to opt for the old regime.

Difference between old and new tax regime

The Old Tax regime provides several tax deductions and exemptions for individuals, including house rent allowance (HRA), leave travel allowance (LTA) and other deductions under Sections 80C, 80D, 80CCD(1b) and 80CCD(2).

However, these exemptions and deductions are not available in the new one.

While the new tax regime has lower tax rates but fewer deductions and exemptions, the older one had higher tax rates but provided various deductions under different sections of the Income Tax Act.

The older one provide several basic income exemption limits depending on the taxpayer's age.

For individuals under 60 years, the basic income exemption limit is Rs 2.5 lakh, while it is Rs 3 lakh for people who are aged 60 years and above, but under 80. The basic exemption limit for senior citizens -- aged 80 years and above -- is Rs 5 lakh.

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Income Tax Rules FY 2024-25: New vs old tax regime - 6 rules salaried individuals should know

I ncome tax rules for FY 2024-25: As the financial year 2024-25 has begun on April 1, it is important to be aware of income tax rules. Even if changes are announced in the Union Budget or during the year, they usually take effect from the start of the new financial year. This year, there were no changes announced for FY 2024-25 in the interim budget, so the income tax rules from the previous year remain unchanged.

Here are the six income tax rules that will apply from April 1, 2024:

1. Choosing between old and new income tax regimes

2. basic exemption limits.

Income tax slabs under new tax regime

Income tax slabs under old tax regime

3. Tax rebates

The new tax regime offers a higher rebate compared to the old one. Under the new regime, individuals can get a rebate of up to Rs 25,000, making incomes up to Rs 7 lakh tax-free. In contrast, the old tax regime offers a rebate of up to Rs 12,500, making incomes up to Rs 5 lakh tax-free.

4. Deductions and exemptions: New vs old regime

The new tax regime provides only two deductions for individuals. These include a standard deduction of Rs 50,000 from salary and pension income, and a deduction under Section 80CCD (2) for the employer's contribution to the NPS account. Family pensioners are also eligible for a standard deduction of Rs 15,000 under the new tax regime. It's worth noting that these deductions are also available under the old tax regime.

Claiming eligible deductions, depending on the chosen tax regime, allows individuals to decrease their net taxable income and tax liability.

5. Filing Income Tax Returns (ITR)

6. surcharge rates.

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Budget 2023: What is the new tax regime and will you get I-T rebate?

Nirmala sitharaman said that while the new tax regime would be the default, tax payers could opt for the old one. she also announced changes to tax slabs in the new tax regime..

Finance Minister Nirmala Sitharaman made five major announcements on personal income tax to benefit the “hard-working” middle class. She also said that while the new tax regime would be the default, tax payers could opt for the old one.

Sitharaman proposed to raise the rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime. Therefore, if an individual has opted for the new tax regime, he or she will not be required to pay any tax up to an annual income of Rs 7 lakh.

She also announced changes to tax slabs in the new tax regime.

The new income tax slabs under the new tax regime are

Rs 0-3 lakh: Nil

Rs 3-6 lakh: 5 per cent

Rs 6-9 lakh: 10 per cent

Rs 9-12 lakh: 15 per cent

Rs 12-15 lakh: 20 per cent

Over Rs 15 lakh: 30 per cent

The move is aimed at incentivising people to shift to the new tax regime, which has not seen much traction since launch in FY21.

What is the new tax regime?

The lower tax regime for individuals was introduced in 2020 under Section 115BAC as a simpler alternative, without claiming any investment-related deductions or exemptions. This was expected to prove useful for individuals who were not in a position to invest and claim deductions. The new regime had more slabs than the previous one.

However, this regime has not seen many takers so far, as it is considered more complicated.

Earlier in January, Sitharaman had responded to a claim in the book Reform Nation, authored by Observer Research Foundation Vice President Gautam Chikermane, that the new and voluntary income tax regime had removed the simplicity of the old one, which had just three tax slabs of 10 per cent, 20 per cent, and 30 per cent.

“If indeed there were gains of simplicity (from the old income tax regime), I want to assure they have not been reversed,” Sitharaman had said in New Delhi . “People have been filing returns under it. Gains of simplicity are still there.”

She said the old tax regime was full of exemptions.

“For every tax assessee, it has 7, 8, 9, 10 exemptions. And with all that exemptions, the rate 10, 20, 30 per cent continues. It continues even today. We have not removed it. What we have done in the name of simplicity and to avoid harassment… removing harassment was what was aimed at when we brought in faceless tax assessment,” she said.

“In order to keep the simplicity and not deny those who want to keep the old simplicity, we kept that intact but we have come up with a parallel system which has no exemptions whatsoever, but which has simpler, more favourable rates… The reason why I had to bring in seven slabs was to make simpler and lower rates for those who are in the lower incomes,” she said.

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And who is eligible for rebates under the old tax regime?

Under this regime, people can cite investments, house rent,  LTA,  exemptions under Section 80C, etc. to reduce the amount of tax they have to pay. However, some experts believe this means a higher burden of compliance on taxpayers.

Union Budget 2023: All you need to know

• ↗️ Finance Minister Nirmala Sitharaman’s Union Budget 2023 has some big takeaways
• ↗️ First, what everyone has been looking forward to: changes in the new income tax regime. She has made the new tax regime more attractive. There are changes in the rebate limit and in tax slabs. What does this mean for the taxpayer?
• ↗️ FM Sitharaman proposed a 33% increase in capital investment outlay, raising it to Rs 10 lakh crore. This is the biggest in the past decade. What does it mean?
• ↗️ Some articles get cheaper and others get costlier due to changes in customs duty. Here is a list
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• ↗️ The FM called it the ‘first Budget of Amrit Kaal’. PM Narendra Modi said it will build a strong foundation for a developed India. What did opposition leaders say?

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Is the simplified new tax regime the right step to provide a better tax planning and tax payer experience?

Partner, People Advisory Services (Tax), EY India

Experienced in tax and regulatory aspects encompassing personal tax, employment law, immigration, employee rewards (including ESOP) and HR consulting. Passionate about Diversity & Inclusiveness.

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India tax insights - march 2023, budget 2023 has made tax planning and the concessional tax regime more alluring by introducing deductions. .

In brief 

• An efficient tax policy aims to keep at the tax rates low, allow very few exemptions and deductions and make compliance easier.
• However, the transition to such a tax system might not be easy, given the high tax rates, and a plethora of deductions and exemptions in the Indian tax system. 
• The finance minister announced some changes in the new regime for the individual taxpayers.  

The Finance Act, 2020 introduced an optional concessional tax regime with lower tax rates sans most deductions. However, this regime could not bring into its fold many taxpayers, as most taxpayers have been availing deductions and exemptions and have been able to optimize their tax bill. Thus, the old tax regime, with its offer of deductions/exemptions, continued to be popular for tax planning.

Budget 2023 attempted to make the concessional  tax  regime (CTR) more attractive by introducing standard deductions, by enhancing the maximum amount of income not chargeable to tax from INR2.5 lakh to  INR3 lakh, the new tax regime also has a widened the slab with lower tax rates, reducing the surcharge for income over INR5 crore, increasing the income threshold for a rebate from INR5 lakh to INR7 lakh so that those earning up to INR7 lakh of taxable income do not pay any tax. Also, CTR /new tax regime will henceforth be the default tax regime and the taxpayer will need to specifically opt for the old regime if they wish to do so. Government hopes that many taxpayers will shift to the new tax regime. However, the fact remains that taxpayers may have to do an evaluation of their personal circumstances to assess whether they continue with the old tax regime with deductions or move to the new tax regime.

It is likely that a taxpayer who claims deductions of INR3.75 lakh and above at an income of INR15.5 lakh and above will still continue with the old tax regime. Particularly for salary income earners, deduction for rent paid against house rent allowance or LTA could make a taxpayer stay with the old tax regime for now. The direction for  tax policy  is clear and it is likely that eventually we will have a single tax regime without deductions/ exemptions. Meanwhile, this selection of the personal tax regime (old vs new / concessional) can be made every year depending on a comparison of the tax cost estimate under the two systems for salaried and non-business/non-professional taxpayers. 

Case in favor of a simplified new tax regime is that it would simplify matters for employers and taxpayers. Employers need not worry about collecting evidence of rent paid, travel expenses, investments made, payment of interest on housing loans, etc. The taxpayer’s return would also be simple and transparent, reducing tax disputes. The young taxpayers may forego deductions and pay some extra taxes under the simplified tax regime since claiming deductions would have meant cash getting blocked in certain investment instruments like insurance policies, government run pension plans etc., that might not be their preferred investment instruments. Sections like 80C push individual taxpayers to invest in identified investments for tax deductions but with the new tax regime the young taxpayer might prefer to pay the extra tax and invest their funds where they deem more appropriate, including equity shares in the stock market, investment in start-ups or even spend it if they so prefer. 

For the tax administration, the ease of compliance helps taxpayers to voluntarily file tax returns without hassles, thereby getting more taxpayers into the tax system. Larger volume of taxpayers’ data in the data bank creates opportunities for the tax administration to increase detection of transactions that might have resulted in leakage of taxes and perform analytics for more agile tax policy. Given digitization, the interplay of the data collected from various sources like, banks, credit card companies, travel agents, stock market, etc with the taxpayers’ tax return data would help to ensure better tax collection. 

Budget 2023  also continues to work on the agenda of plugging avenues for tax planning for High Net worth Individuals (HNIs) such as introducing cap of INR10 crores for capital Gains exemption on sale of residential house (section 54 of Income Tax Act 1961)  and or sales proceeds on sale of long-term asset  ( section 54 F of Income Tax Act 1961) which can be justified on grounds of equity and need for revenues to offset lower tax rates. Similarly, streamlined tax benefit for high premium insurance and market linked debentures are outcomes of the data analytics that suggest misuse of beneficial provisions by HNIs.

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Related articles

Budget 2023 introduced changes to the optional concessional tax regime, making it more attractive with standard deductions and widened tax slabs. However, taxpayers may still prefer the old regime with deductions depending on their personal circumstances. The government aims to simplify tax compliance for employers and taxpayers and increase voluntary tax filing. 

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New income tax regime: all your questions answered.

New tax regime 2023: Budget 2023 announced a few changes in the new income tax regime and revised tax slabs to make it more attractive for taxpayers. Here we have answered a few important questions regarding the revised new tax regime 2023.

What are the income tax slab and tax rates under the revised new tax regime?

How much is the basic exemption limit hiked under the revised new tax regime, what is the surcharge amount under the revised new tax regime, what are the changes in the revised new tax regime.

• Under the new income regime, the basic exemption amount has been increased from Rs 2.5 lakh to Rs 3 lakh.
• The new tax structure becomes the taxpayers' default option. They do, however, have the option of returning to the previous tax structure.
• Under the new tax regime, income tax slabs have been revised..
• Under the new tax structure, a standard deduction of Rs 50,000 has been implemented for salaried and pensioners only.
• The Section 87A rebate has been increased under the new tax regime for taxable incomes up to Rs 7 lakh. Individuals with taxable income of less than Rs 7 lakh will not have to pay any taxes if they choose the new tax regime in FY 2023-24.

Any changes were made in the old tax regime for FY 2023-24?

What is the basic income exemption limit under the old tax regime offer, is the new revised tax regime a default option, what kind of tax relief are available under both income tax regimes, what happens if a salaried individual does not specify that he/she wants to opt for the old tax regime, what all deductions are still available under the revised new tax regime, if i choose new tax regime this year, can i switch to the old tax regime next year, who cannot switch between the two regimes every year, can a person working as a consultant switch between the regimes every year, can i claim section 80c deduction under revised new tax regime, read more news on.

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Home > Income Tax > Help Center > New Tax Regime Last Updated: Mar 16th 2024

Old vs New Tax Regime | Explained for Salaried & Business Tax Payers

Budget 2020 has announced a New Tax Regime (aka Alternate Tax Regime) u/s 115BAC which is applicable from FY 2020-21 (AY 2021-22). All individuals and HUF have an option to choose between Old regime (regular) or New regime depending upon their Income and Investments. What's different to the common belief is that it applies to both Salaried and Business taxpayers.

Know more on the Choice, Benefits, and the Limitations.

This document covers

• Tax Rates under New Tax Regime.
• Deductions / Exemptions not available under New Tax Regime ( Other than Business ).
• Deductions / Exemptions not available under New Tax Regime ( Business ).
• Time Limit for exercise of Option under New Regime.
• How New Tax Regime affects TDS on Salaries?.
• Forms required to be filed for opting New Tax Regime.
• Details required to be given in form 10-IE.
• Restrictions on Carry Forward Losses.
• Frequently Asked Questions

1. Tax Rates under New Tax Regime

The taxpayers are required to pay tax at concessional rates under New Tax regime (u/s 115BAC). The concessional tax rates under New Regime are as follows. If you want to know the difference between Old vs New Tax Regimes, refer Difference between Old Tax Regime and New Tax Regime

From FY 2023-24 ( per Budget 2023 & 2024 )

From fy 2020-21 to fy 2022-23.

Marginal Relief has been introduced in New Tax Regime w.e.f FY 2023-24.Marginal Relief under New tax Regime means the tax payable should not exceed the income that exceeds Rs 7 lakhs.

For Example : Mr Ram has a net taxable income of Rs 715000 for FY 2023-24. He wants to opt for New Tax Regime. In this case, he is not eligible for rebate u/s 87A as his income exceeded Rs 7 lakhs. He is required to pay a tax of 26500(excluding Edu cess) . In this case, the income exceeding Rs 7 lakhs (7,15,000-7,00,000=15000) is less than the tax payable of Rs 26500. Hence the marginal relief is applicable on his taxes payable for FY 2023-24

After applying marginal relief, his tax payable is 15000 (excluding educ.cess) which we will be a benefit to Mr Ram

• When filing through EZTax.in the system will auto calculate both Old and New Tax Regime calculations for you to choose with the maximum refund eligible tax regime to eFile your IT Return.
• Refer Income Tax Help Center for more information or when you are working in the EZTax.in IT Filing Service, go to "Summary" Page to see the comparison. while realtime calculation is available at the top of the screen.

2. Deductions / Exemptions not available under New Tax Regime ( Other than Business )

If the taxpayer wants to opt for New Regime, certain deductions/exemptions would not be allowed. Following are the deductions/exemptions not available for taxpayers opting for new regime.

• 10(13A) – House Rent Allowance
• 10(5)- Leave Travel Concession
• 10(14)- Allowances to meet expenses relating to duties or personal expenses
• 10(16)- Standard Deduction, Professional Tax and Entertainment Allowance
• 10(17)- Daily Allowance or constituency allowance of MP’s and MLA’s
• 10(32)- Exemption in respect of income of minor child included in the parent
• 24(b)- Interest on Housing Loan
• 57(iia) – 15% Deduction in respect of Family Pension
• 80C to 80U except employer contribution to NPS u/s 80CCD (2)
• Free or concessional food and non-alcoholic beverages through paid vouchers and usable only at eating joints

3. Deductions / Exemptions not available under New Tax Regime ( Business )

Following are the deductions /exemptions not available under New Tax Regime for the tax payers who are filing returns under Business

• 32(1) (iia)- Additional Depreciation
• 33AB-Tea/Coffee/Rubber development account
• 33ABA- Site Restoration fund
• 35(1)(ii), (iia), (iii) or 35(2AA)- Deduction in respect of contribution to notified universities/research associations.
• 35AD-Investment linked tax incentives for specified business.
• 35CCC- Deduction in respect of expenditure incurred on notified agriculture project.

4. Time Limit for exercise of Option under New Regime

While the general understanding from the Finance Ministry is that over the time, the department may sunset the old regime for good, the restrictions defined may confuse the taxpayers. Below is an effort to explain when to switch and the limitations.

4.1 Individual / HUF with NO Business / Profession Income :

4.2 individual / huf with business income :.

As on 3rd Mar 2022, govt. is mulling to sunset the Old Tax Regime to strengthen the new tax regime and to reduce the compliance burden on taxpayers to plan and manage.

As on 1st Feb 2023, part of Budget 2023 , govt. has given clear direction to eventually sunset the old tax regime and has made "new tax regime" a default when filing taxes in India . EZTax team has predicted this few years ago and was articulated in budget expectations for last 2+ years.

Hence decisions like home loan for the purpose of getting the tax saving would be discouraged unless you see other benefits of owning a home such as pride, confidence, and material benefit from rent vs buy comparison.

5. How New Tax Regime affects TDS on Salaries?

• The Taxpayers having income other than business income should disclose their intention to opt for new regime u/s 11BAC to their respective employers.
• If no declaration is made by the employee for opting new regime, the employer will deduct the taxes under Old Regime.
• The declaration made by the employee cannot be modified during the same year. It will be valid throughout the year.
• The declaration made to employer cannot be treated as exercise of New Tax Regime options.
• The option at the time of filing of Income tax return can be different from declaration made to employer.
• Declaration of Old or New Tax Regime to your employer and / or a tax consultant during the year is mainly to withhold the TDS appropriately. You have a choice to select Old or New Tax Regime at the time of IT Filing.

6. Forms required to be filed for opting New Tax Regime

CBDT has notified Form 10-IE . An Individual / HUF are required to fill and submit form 10-IE at the time of filing Income Tax Return if they want to opt for new regime for a particular financial year. The due date for submission of form 10-IE is same as filing income tax return i.e., July 31 unless extended.

The information in the Form 10-IE are already available part of the return and IT Return is a fact and having this form to be uploaded in addition to the IT Filing may add additional burden.

We @ EZTax.in assume that this requirement may be dropped soon and the ITD part of their new data exchange schema provide a facility for such as an additional questionnaire. If no such thoughts, we request the ITD to consider such measure to ease the process of filing.

W.e.f FY 2023-24, New Tax Regime is default tax Regime for all the taxpayers.

The taxpayers filing ITR 1 and ITR 2 are required to disclose their selected tax regime in the Income tax Return.

The taxpayer filing ITR 3 and ITR 4 (who are having business) are required to file Form 10IEA to opt out of New tax Regime and select old Tax Regime or re-entry to New Tax Regime.However Form 10IEA must be filed on or before the due date of filing Income Tax Return.

6a. More on Form 10IE?

Refer Form 10IE for Opting New Tax Regime for more details.

6b. How to download Paper Copy of Form 10IE?

While the Form 10IE is available Online, you may refer to Department announced Form 10IE for different reasons and where Online form may not be possible to fill.

Download Form 10IE

7. Details required to be given in form 10-IE

The following information is required to be given in form 10-IE

• Name of individual/HUF
• Financial year for which option is exercised.
• If the individual/HUF has any income from business/profession
• Date of birth
• Nature of business/profession (only if there is any business/profession)

8. Restrictions on Carry Forward Losses

Under New Tax Regime, certain losses are not allowed to be set off or carry forward. Following losses are not allowed.

• Set off of any loss under the head house property with any other head of income.
• Set off of any loss, carry forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to deductions / exemptions not available under new regime (mentioned above).

9. Frequently Asked Questions

No, the concessional rates under New Regime does not apply to incomes chargeable at special rates.

Yes, the rebate of Rs 12500 u/s 87A applicable to taxpayers whose Net Taxable income is less than Rs 5 Lakhs under Old Regime and New Regime

If your Income does not have Business/Profession Income, you can change the Tax Regime every year,

No, the declaration made to employer cannot be changed in the same financial year.

Filing form 10-IE within due date is mandatory to opt concessional tax rates under New Tax Regime. If Form 10-IE is not filed, the Income tax department will disallow the concessional rates and calculate the taxes under Old Tax Regime.

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• Union Budget 2024

New vs. Old Income Tax regime with examples – Budget 2023

Let us understand the Old Vs. New Tax regimes for FY 2023-24.  In this article, we will discuss taxability under both new vs. old Income Tax regimes after considering revised Income Tax slabs proposed by Finance minister in Union Budget 2023-24 as applicable for Assessment Year 2024-25 i.e., Financial Year 2023-24. Author has analyzed different income situations and and as per those situations which tax regime is better to opt is been explained with the help of practical examples.

Proposed Tax Slabs for FY 2023-24 under new vs. old Income Tax regimes

Let’s discuss taxability in both Tax regimes with some situations, these are some examples and can be more with different scenarios of income and investments.

Situation 1: If your Income is below ₹ 7 lakh or Up to 7 lakh in a FY 2023-24

Conclusion : If Income is less than or up to 7 lacs, better to go with the New Tax regime.

Situation 2: If your Income is 9 lakh in a FY 2023-24

Conclusion : If Income is upto 9 lacs, then also better to go with New Tax regime.

Situation 3: If your salary Income is 9 lakh in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000

Conclusion: If Income is upto 9 lacs, then also better to go with New Tax regime.

Note: Standard deduction is available to salaried employees only

Situation 4: If your Income other than salary is 9 lakhs in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000

Situation 5: If a person is having home loan and paying interest on loan more than 2 lacs and Income other than salary is 9 lakh in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000

Situation 6: If your Income is 12 lakh in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000

Conclusion : If income is more than 9 lacs then it is preferrable to go with old regime

Situation 7: If your Income is 15 lakhs in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000

Conclusion:   If income is more than 15 lacs then it’s preferrable to go with new tax regime

Situation 8: If your Income is 20 lakh in a FY 2023-24, and have deduction under Section 80C-1.5 lacs and 80D- 25000

Conclusion : If income is more than 20 lacs then it is preferable to go with the New Regime

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Name: CA Neha R Kashyap

Qualification: ca in practice, company: anra & associates, location: delhi, delhi, india, member since: 11 apr 2019 | total posts: 17, my published posts, join taxguru’s network for latest updates on income tax, gst, company law, corporate laws and other related subjects..

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Situation 1: 7 lakhs, old tax regime, tax is 1,12,500 Situation 2: 9 lakhs, old tax regime, tax is 92,500, Totally confusing.

in situation no 6 , why we choose old regime.

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Finance Ministry clarifies: No changes in new tax regime, issues 6-point note

In a statement, the ministry addressed confusion over the new tax regime, emphasising its lower rates but fewer exemptions and deductions. finance minister nirmala sitharaman's interim budget assured the preservation of existing tax rates..

Interim budget highlights by Nirmala Sitharaman

During the presentation of the interim budget on February 1, 2024, Union Finance Minister Nirmala Sitharaman assured that there would be no alterations to taxation, proposing to maintain existing direct and indirect tax rates.

Key points from Finance Ministry

• Responding to misinformation circulating on social media platforms, the Finance Ministry shared six important points for the financial year regarding taxes:
• No new change: There will be no new change as of April 1, 2024.
• Introduction of new tax regime: The new tax regime under Section 115BAC(1A) was introduced in the Finance Act 2023, differing from the existing old regime.
• Applicability: The new tax regime is applicable for individuals other than companies and firms as the default regime from the Financial Year 2023–24, with the corresponding Assessment Year being AY 2024–25.
• Lower tax rates: While the new tax regime offers significantly lower tax rates, it does not provide the benefit of various exemptions and deductions available in the old regime.
• Option for taxpayers: Taxpayers can choose between the old and new tax regimes based on what they find beneficial.
• Opt-out option: Taxpayers have the option to opt out of the new tax regime until filing their returns for AY 2024–25. Eligible individuals without business income can select the regime for each financial year as per their preference.

Interim budget tax slabs

As per the interim budget, the income tax slabs remain unchanged for the new financial year (FY2024–25). Income ranging from Rs. zero to Rs. 3,00,000 will be exempt from tax, with subsequent slabs taxed at 5%, 10%, 15%, 20%, and 30%, respectively.

Also read |  Income tax department cracks down on PAN fraud for false HRA claims

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Home » Blog » Breaking Down the Old vs New Personal Tax Regime – What You Need to Know

Breaking Down the Old vs New Personal Tax Regime – What You Need to Know

• Blog | Income Tax |
• Last Updated on 29 March, 2023

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Table of Contents

• New Personal Tax Regime: Backdrop
• Budget Amendments in New Personal Tax Regime
• Deductions allowable in New Personal Tax Regime
• Deductions allowable only in Old Personal Tax Regime
• New Tax Regime to be the Default Regime
• New vs Old Regime: Comparison between Slab Rates
• New vs Old Regime: Break Even Point Analysis
• New vs Old Regime: Empirical Findings
• New vs Old Regime: Tip for Home Loan Takers
• New vs Old Regime: Practical Case Studies
• Presumptive Taxation u/s 44AD/44ADA: New vs Old Regime
• New vs Old Regime: Income Tax Calculator
• Reference Articles

1. New Personal Tax Regime: Backdrop

• With a view to simplify the complex maze of plethora of deduction claims of the individual & HUF taxpayers, Government introduced the New Personal Tax regime w.e.f. FY 2020-21 and onwards with reduced tax rates u/s 115BAC
• The compulsory requirement of foregoing of the majority of the available specified deductions by the individuals and HUFs opting for the new personal tax regime made the said new regime unpopular and with a very few takers
• The Government wanted more and more taxpayers to switch to the new regime, to reduce the complexities in return filing and assessments arising out of the plethora of deduction claims of the assessees applicable in the old regime
• In order to make the new regime more appealing to the taxpayers, some significant amendments in the new personal tax regime u/s 115BAC, have been proposed in the Finance Bill 2023

2. Budget Amendments in New Personal Tax Regime

• New Personal Tax Regime u/s 115BAC(1A) to be the DefaultRegime
• Basic Exemption Limit increased from Rs 2.5 lakhs to Rs 3 lakhs in new regime
• Tax slabs in New personal tax regime revamped
• New revamped slab rates are: upto 3,00,000 – Nil Tax; 3,00,001 to 6,00,000 – 5%; 6,00,001 to 9,00,000– 10%; 9,00,001 to 12,00,000 – 15%; 12,00,001 to 15,00,000 – 20% and above 15,00,000 – 30%.
• Threshold income limit for rebate u/s 87A increased from Rs. 5 lakhs to Rs. 7 lakhs. At the above newly prescribed slab rates, the new rebate limit u/s 87A comes out Rs. 25,000 on the exempt income of Rs 7 lakhs, as compared to existing rebate limit of Rs 12,500 on the exempt income of Rs 5 lakhs
• Standard Deduction u/s 16(ia) of Rs. 50,000, now allowable in new personal tax regime, as well
• Deduction in respect of family pension u/s 57(iia), upto Rs. 15,000, allowable in new personal tax regime, as well
• Surcharge rate for HNIs, having annual incomes exceeding Rs. 5 crores, reduced from 37% to 25%, so their effective tax rate will reduce from 42.74% to 39%
• New Personal Tax Regime can be opted by AOP, BOI & Artificial Juridical Person, as well
• All the above amendments will become effective from FY 2023-24 (AY 2024-25) and onwards

3. Deductions allowable in New Personal Tax Regime

• Standard Deduction of Rs. 50,000 u/s 16(ia) to salaried individuals & pensioners
• Deduction in respect of family pension u/s 57(iia), upto Rs. 15,000
• Deduction in respect of contribution to Agniveer Corpus Fund under the newly inserted section 80CCH(2)
• Deduction in respect of Employer’s Contribution to National Pension Scheme (NPS) u/s80CCD(2) to the extent of 10% of basic salary and dearness allowance in case of private sector employee & 14% in case of government employee
• Transport allowance u/s 10(14) in case of a specially-abled person
• Conveyance allowance u/s 10(14) received to meet the conveyance expenditure incurred as part of the employment
• Daily allowance u/s 10(14) received to meet the ordinary regular charges or expenditure you incur on account of absence from his regular place of duty
• Exemption on Voluntary Retirement 10(10C), Gratuity u/s 10(10) and Leave encashment u/s 10(10AA)
• Interest on Home Loan on let-out property (Section24)
• Deduction in respect of additional employee cost (Section80JJAA)

4. Deductions allowable only in Old Personal Tax Regime

• House Rent Allowance u/s10(13A)
• Leave Travel Concession u/s10(5)
• Interest on housing loan in respect of self occupied or vacant property u/s24(b)
• Helper Allowance u/s10(14)
• Children Education Allowance
• Chapter VIA Deductions u/s 80C like LIC, ULIPs, PPF; NPS Contribution u/s80CCD(1)/(1B)
• Deduction in respect of Mediclaim Premium u/s 80D
• Deduction in respect of Interest paid on education loan u/s 80E
• Deduction in respect of Donation u/s 80G
• Deduction in respect of Royalty income of Authors on Books u/s 80QQB
• Deduction in respect of Interest Income on Savings Bank account u/s 80TTA
• Deduction in respect of Interest Income on deposits with Post Office, Banks u/s 80TTB
• Additional Depreciation u/s32(1)(iia)

5. New Tax Regime to be the Default Regime

• Uptill FY 2022-23 (AY 2023-24), the Old Personal Tax Regime is the Default Regime and the Taxpayers opting for the New regime and having their income under the head ‘Profits from Business or Profession’ are required to file an electronic declaration in prescribed Form 10IE, before the due date of filing their ITRs
• W.e.f. FY 2023-24 (AY 2024-25), the New Personal Tax Regime u/s 115BAC(1A), will become the Default Regime
• Persons having their income under the head ‘Profits from Business or Profession’ and wantingto benefit from the specified deductions available only under the Old regime, are now required to exercise their option of filing their ITRs under the Old Regime by filing an electronic declaration in the prescribed form u/s 115BAC(6), before filing of their ITRs
• Such persons shall be able to exercise the option of opting back to the new regime u/s 115BAC(1A) only once
• Persons not having income from business or profession shall be able to exercise the option of furnishing their ITRs as per the Old regime, in each year, by selecting the option of old regime in their ITR Forms
• The salaried individuals will be required to submit their investment declaration forms to their employers at the beginning of the financial year only, if they wish to opt for the old regime, in order to enable their employers to deduct accurate TDS on their salaries, after giving the benefit of deductions claimed

6. New vs Old Regime: Comparison between Slab Rates

The comparison between the tax slab rates in the two personal tax regimes is tabulated as under, for ready reference of all

7. New vs Old Regime: Break Even Point Analysis

• For individuals and HUFs having taxable annual incomes of upto Rs 7 lakhs and above Rs 5 crores, respectively, the choice of going in for the new regime is very clear.
• However, for those earning annual incomes in between 7 lakhs to 5 crores, the figures of available deductions which are required to be claimed in the old regime to break-even with the reduced tax liability in the new regime are tabulated below:

8. New vs Old Regime: Empirical Findings

• As per the numbers arrived at based on the break-even point analysis, all taxpayers having their annual taxable incomes above Rs 15 lakhs should consider continuing with the old personal tax regime, only, if their available deductions are greater than Rs. 4,25,000 in a year.
• But, if such available deductions are equal to or less than Rs 4,25,000 in a year, or if they don’t want to block their disposable funds in making such investments of Rs 4,25,000, then they should definitely switch to the new regime to reduce their income tax liability.
• Those taxpayers earning an annual income of Rs 10,00,000 should consider continuing with the old regime only, if their available deductions exceed Rs 3,00,000 in a year, otherwise they should switch to the new regime.
• Those taxpayers earning an annual income of Rs 12,00,000 should consider continuing with the old regime only, if their available deductions exceed Rs 3,50,000 in a year, otherwise they should switch to the new regime.
• Also, for individuals earning annual income of Rs 12,50,000 the break-even figure of available deductions comes out at Rs. 3,62,500 and for annual income of Rs 15,00,000 this figure of available deduction works out at Rs.   4,08,333.

9. New vs Old Regime: Tip for Home Loan Takers

• One more important observation. In the Budget, the double deduction in respect of home loan principal repayments and interest first u/s 80C/24(b) and subsequently again as cost of acquisition u/s 48, while computing capital gains on sale of such house property, has been plugged and prohibited.
• So, as a natural corollary, if one’s home loans’ principal and interest EMIs constitute a sizeable chunk of available deductions, and if one intends to sell-off the house in future, then one may also consider forgoing the deduction in respect of home loan principal repayments u/s 80C and interest u/s 24(b) presently, and conveniently opt for the new regime.
• This will help one claim the same as cost of acquisition or cost of improvement in respect of such house property in computing the capital gains, at the time of its sale. Even the benefit of indexation may also be availed on such amounts then.

10. New vs Old Regime: Practical Case Studies

Practical case study 1, practical case study 2, practical case study 3, practical case study 4, practical case study 5, 11. presumptive taxation u/s 44ad/44ada: new vs old regime.

• The threshold limit for presumptive taxation scheme in respect of small business u/s 44AD has been increased from Rs 2 crores to Rs 3 crores, and in respect of professionals u/s 44ADA has been increased from Rs 50 lakhs to Rs 75 lakhs, w.e.f. FY 2023-24 and onwards
• These increased limits are subject to the mandatory condition that respective cash receipts from such small businesses or professions, must not exceed 5% of their total receipts from such business or profession
• In the presumptive taxation scheme u/s 44AD, the proprietor businessman declares the income at 6%/8% of the total turnover, on presumptive basis, without claiming any business expenditure
• In the presumptive taxation scheme u/s 44ADA, the proprietor professional declares the income at 50% of the total turnover, on presumptive basis, without claiming any business expenditure
• Chapter VIA deductions are available in presumptive income schemes u/s 44AD/44ADA. In terms of tax slab rates, the new regime u/s 115BAC(1A) is naturally the clear choice. However, if the taxpayers opting for presumptive income scheme, also have Chapter VIA deductions like 80C/80D/Interest on Home Loan for self occupied property etc. then the break-even point analysis done by us in previous slide, will help in the choice between the Old and New regime

12. New vs Old Regime: Income Tax Calculator

• The Income Tax Department has launched a Tax Calculator for the Taxpayers in order to assist them in choosing wisely between the Old and the New Personal Tax Regime.
• The link for the said Tax Calculator is: https://incometaxindia.gov.in/Pages/tools/115bac-tax-calculator-finance-bill-2023.aspx

13. Reference Articles

• The Tale of Dhani Ram, Mani Ram, Buni Ram, Gyani Ram & the Personal Tax related Budget Amendments: https://www.taxmann.com/budget/budget- story/488/the-tale-of-dhani-ram-mani-ram-buni-ram-gyani-ram–the-personal- tax-related-budget-amendments
• Which Personal Tax Regime is More Beneficial? An In-depth Break-Even Point Analysis: https://www.taxmann.com/budget/budget-story/457/which-personal- tax-regime-is-more-beneficial-now-an-in-depth-break-even-point-analysis

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Has your income tax slab changed from today? Finance Ministry says this...

Finance ministry clarifies no new tax changes from april 1, 2024. taxpayers can opt for old or new regime based on preferences.

The Finance Ministry has issued a clarification amidst the dissemination of misleading information on social media platforms regarding the new tax regime. It emphasizes that there are no new changes taking effect from April 1, 2024. Taxpayers have the flexibility to choose between the old and new tax regimes based on their preferences and financial circumstances, with the option to opt out of the new regime until filing their return for Assessment Year 2024-25. Eligible individuals without business income can alternate between the old and new regimes for each financial year.

Also Read | Income tax slabs FY 2024-25: Five tips to help taxpayers decide between old and new income tax regimes

On the social media platform, the Finance Ministry posted: "It has come to notice that misleading information related to the new income tax regime is being spread on some social media platforms. It is therefore clarified that:

1)There is no new change which is coming in from 01.04.2024.

2)The new tax regime under section 115BAC(1A) was introduced in the Finance Act 2023, as compared to the existing old regime (without exemptions) (SEE TABLE BELOW)

3)The new tax regime is applicable for persons other than companies and firms, is applicable as a default regime from the Financial Year 2023-24 and the Assessment Year corresponding to this is AY 2024-25.

4)Under the new tax regime, the tax rates are significantly lower, though the benefit of various exemptions and deductions (other than the standard deduction of Rs. 50,000 from salary and Rs. 15,000 from family pension) is not available, as in the old regime.

5)The new tax regime is the default tax regime, however, taxpayers can choose the tax regime (old or new) that they think is beneficial to them.

6)The option for opting out from the new tax regime is available till the filing of return for the AY 2024-25. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose a new tax regime in one financial year and an old tax regime in another year and vice versa.

Income tax slabs as per the new tax regime are as follows

Income from ₹ 0 to ₹ 3,00,000: 0% tax rate

Income from ₹ 3,00,001 to ₹ 6,00,000: 5%

Income from ₹ 6,00,001 to ₹ 9,00,000: 10%

Income from ₹ 9,00,001 to ₹ 12,00,000: 15%

Income from ₹ 12,00,001 to ₹ 15,00,001: 20%

Income above ₹ 15,00,000: 30%

Old regime tax slabs

1) Income up to ₹ 2.5 is exempt from taxation under the old tax regime.

2) Income between ₹ 2.5 to ₹ 5 lakh is taxed at the rate of 5 per cent under the old tax regime.

3) Personal income from ₹ 5 lakh to ₹ 10 lakh is taxed at a rate of 20 per cent in the old regime

4) Under the old regime personal income above ₹ 10 lakh is taxed at a rate of 30 per cent.

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New income tax regime: Salaried individuals can claim these deductions

Although the new tax regime has become more appealing after the Union Budget 2023-24, it does not incorporate the standard deductions available under the old tax regime.

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• New tax regime has become the default option for taxpayers
• Two deductions applicable for salaried individuals
• Common deductions not eligible under new income tax regime

If you intend to choose the new tax regime for the financial year 2024-25, there are two deductions available specifically for salaried individuals.

The new tax regime, which has zero tax liability for people with income up to Rs 7 lakh, has become the default regime for taxpayers .

Standard Deduction

It is a straightforward benefit offered exclusively to salaried individuals and pensioners. When calculating the net taxable salary or pension income, employers automatically subtract Rs 50,000 as a standard deduction from the gross salary. No documentation is required to claim this deduction.

This deduction is reflected in Part B of Form 16, the TDS certificate issued by the employer, detailing the taxes deducted from the salary throughout the financial year. When filing the income tax return (ITR), individuals can claim this deduction under the head "Income from salaries/pension" as per Section 16(ia) of the Income-tax Act.

Section 80CCD (2) deduction under NPS

This deduction has been available since the introduction of the new tax regime in the fiscal year 2020-21.

It applies when an employer deposits funds into an employee's Tier-I NPS account. The income tax laws specify the maximum deduction allowed for both private and government employees.

Private sector employees can claim up to 10% of their salary as a deduction, while government employees can claim up to 14% of their salary under Section 80CCD (2).

Salary, according to income tax laws, includes basic pay plus dearness allowance.

Typically, the employer's contribution to an employee's Tier I NPS account forms part of the employee's cost to the company (CTC), which can reduce the employee's take-home pay.

The employer's NPS contribution is included in the gross salary payable by the employer. Employees must claim the deduction under Section 80CCD (2) when filing their income tax return (ITR). Part B of Form 16 will contain details of the employer's contribution to the NPS account.

Employees do not need to provide proof of NPS contribution to avoid higher TDS from salaries because the contribution is made directly by the employer to the NPS account, similar to how Employees' Provident Fund (EPF) contributions are made.

However, employees should check their employer's policy on proof submission.

It's important to note that if an employer's NPS contribution exceeds a certain limit, it may be taxable in the hands of the employee.

According to income tax laws, if the total contributions by an employer to EPF, NPS, and Superannuation fund in a financial year exceed Rs 7.5 lakh, the excess amount will be taxable to the employee.

Understanding the New and Old Tax Regimes: Navigating The Tax Planet

Feb 02, 2024

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Explore the intricacies of tax administration with The Tax Planet's comprehensive guide to both the New Tax Regime and the Old Tax Regime. Enhance your understanding of taxation complexities, stay well-informed, and make informed financial choices. Our platform ensures you are well-equipped to optimize your financial strategy by delivering insightful information on the latest developments in tax laws. To know more, visit: https://www.thetaxplanet.com/blog/do-you-know-you-have-the-choice-to-choose-your-tax-rates-know-about-new-tax-regime-and-old-tax-regime

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Presentation Transcript

THE NEW TAX REGIME Under section 115BAC, the Budget 2020 introduces a new regime giving an option to taxpayers to pay income tax at lower rates. The new tax regime comprises six tax slabs with prevailing rates reduced on income up to Rs. 15 lakh.

Slab Rates INCOME FROM RS 2.5 LAKH TO RS 5 LAKH 5% INCOME FROM RS 5 LAKH TO RS 7.5 LAKH 10% INCOME FROM RS 7.5 LAKH TO RS 10 LAKH 15% INCOME FROM RS 10 LAKH TO RS 12.5 LAKH 20% INCOME FROM RS 12.5 LAKH TO RS 15 LAKH 25% INCOME ABOVE RS 15 LAKH 30%

THE OLD TAX REGIME The old tax regime is the existing tax regime according to which all taxpayers earlier use to pay the taxes. The old regimes include 3 tax slabs, for which the pros and cons can be checked below.

Slab Rates INCOME FROM RS 2.5 LAKH TO RS 5 LAKH 5% INCOME FROM RS 5 LAKH TO RS 10 LAKH 20% INCOME ABOVE RS 10 LAKH 30%

CONTACT US Phone Number +91 (981) 109-4733 Website www.thetaxplanet.com Address 10 ,Basement, Vinoba Puri, Lajpat Nagar II, New Delhi, Delhi 110024

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Income Tax Slabs FY 2023-24 & AY 2024-25 (New & Old Regime Tax Rates)

Updated on : Apr 1st, 2024

106 min read

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The income tax slabs are different under the old and the new tax regimes. Further, the slab rates under the  old tax regime  are divided into three categories

• Indian Residents aged < 60 years  +  All the non-residents  
• 60 to 80 years : Resident Senior citizens
• More than 80 years:  Resident Super senior citizens

What Is an Income Tax Slab?

In India, the Income Tax applies to individuals based on a slab system, where different tax rates are assigned to different income ranges. As the person's income increases, the tax rates also increase. This type of taxation allows for a fair and  progressive tax system  in the country. The income tax slabs are revised periodically, typically during each budget. These slab rates vary for different groups of taxpayers.

Let us take a look at all the slab rates applicable for FY 2023-24(AY 2024-25).

For Old Regime, a tax rebate up to Rs.12,500 is applicable if the total income does not exceed Rs 5,00,000 (not applicable for NRIs)

• up to Rs 2,50,000 for Individuals, HUF below 60 years aged and NRIs.
• up to Rs 3,00,000 for senior citizens aged above 60 years but less than 80 years.
• up to Rs 5,00,000 for super senior citizens aged above 80 years.
• Surcharge and cess will be applicable over and above the tax rates

However, under the new t ax regime rebate is up to Rs.25000 is applicable if the total income does not exceed Rs 7,00,000. (not applicable for NRIs)

* Tax rebate equivalent to an amount, tax payable is when the total income exceeds Rs 7,00,000. (not applicable for NRIs)

• Income tax exemption limit is up to Rs 3,00,000 for Individuals, HUF opting for the new regime.

Comparison of tax rates under New tax regime & Old tax regime 

Income tax slab rates for fy 2022-23 (ay 2023-24), a. new tax regime until 31st march 2023 .

* Tax rebate up to Rs.12,500 is applicable if the total income does not exceed Rs 5,00,000  (not applicable for NRIs)

Refer to the above image for the rates applicable to FY 2023-24 (AY 2024-25) for the upcoming tax filing season.

b. Old Tax regime                                     

Income tax slabs for individuals aged below 60 years & huf.

• The income tax exemption limit is up to Rs 2,50,000 for Individuals, HUF below 60 years aged, and NRIs.
• Surcharge and cess will be applicable.

Income tax slab for individuals aged above 60 years to 80 years

• The income tax exemption limit is up to Rs.3 lakh for senior citizens aged above 60 years but less than 80 years.
• Surcharge and cess will be applicable 

Income tax slab for Individuals aged more than 80 years

• Income tax exemption limit is up to Rs 5 lakh for super senior citizen aged above 80 years.

Difference of tax slab rates between New tax regime vs Old Tax regime 

Revised Income Tax Slab Rate AY 2024-25 (FY 2023-24)– For New Regime

What are the major procedural changes in filing of income tax return from fy 2022-23 to fy 2023-24.

• For FY 2022-23, the default regime used to be the Old tax regime, if you wanted to go for the New tax regime, you were required to submit Form 10-IE. After the due date, you have to mandatorily file under the old regime only. 
• For FY 2023-24, the default regime changed to the new tax regime, now if you want to file the return under the old tax regime by claiming all the deductions, exemptions, and losses, then you have to file within the due date. After the due date, you have to mandatorily file under the new regime by giving up on most of the deductions and exemptions and all losses.

How to Calculate Income Tax from Income Tax Slabs?

Illustration 1 : Rohit has a total taxable income of  Rs 8,00,000 . This income has been calculated by including income from all sources, such as salary, rental income, and interest income. Deductions under section 80 have also been reduced. Rohit wants to know his tax dues as per the old regime for FY 2023-24 (AY 2024-2025).

Please note that Rohit is an individual taxpayer assessee having an income tax exemption of Rs 2,50,000. For other taxpayer assessees, i.e. senior citizens and super senior citizens, the Income-tax limit for availing the exemption would be Rs 3,00,000 & Rs 5,00,000, respectively.

Individuals with net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A under the old tax regime, i.e. tax liability will be NIL.

Important Points to note if you select the new tax regime:

• Please note that the   tax rates in the New tax regime are the  same for all categories of Individuals , i.e. Individuals, Senior citizens, and Super senior citizens. 
• Individuals with net taxable income less than or equal to Rs 7 lakh will be eligible for tax rebate u/s 87A, i.e. tax liability will be NIL under the new regime.

What is a Surcharge and the applicable rates?

In case the income exceeds a certain threshold, the additional taxes are to be paid over and above existing tax rates. This is an additional tax on the High Income Earners.

Surcharge rates are as below:

10% of Income tax if total income > Rs.50 lakh and < Rs.1 crore,

15% of Income tax if total income > Rs.1 crore and < Rs.2 crore,

25% of Income tax if total income > Rs.2 crore and < Rs.5 crore,

37% of Income tax if total income > Rs.5 crore             * In Budget 2023 , the highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (applicable from 1st April 2023)

• Surcharge rates of 25% or 37% will not apply to the income from dividends and capital gains taxable under sections  111A (Short Term Capital Gain on Shares) ,  112A (Long Term Capital Gain on Shares) , and  115AD  (Tax on the income of Foreign Institutional Investors). Therefore, the highest surcharge rate on the tax payable for such incomes will be 15%.
• The surcharge rate for an Association of Persons (AOP) consisting entirely of companies will also be limited to 15%.

Additional Health and Education cess at the rate of 4% will be added to the income tax liability.

Consequences of not filing the return within the due date for AY 2024-25

With the failure to file the return within the due date for FY 2023-24, the taxpayer must opt for concessional rates in the New Tax regime but will have to forgo certain exemptions and deductions available in the existing old tax regime. 

In total there are 70 deductions & exemptions that are not allowed, out of which the most commonly used are listed below:

Comparison of Income Tax Slabs under New Regime before and after Budget.

Only the Income tax slabs under the new regimes were revised in the   Union Budget 2023.

Old Tax regime Vs New Tax regime? Which is better?

The new tax regime can largely benefit middle-class taxpayers who have a taxable income of up to Rs 15 lakh.  The old regime is a better option for high-income earners.

The new income tax regime is beneficial for people who make low investments. As the new regime offers six lower-income tax slabs, anyone paying taxes without claiming tax deductions can benefit from paying a lower rate of tax under the new tax regime. For instance, the assessee having total income before deduction up to Rs 12 lakh will have higher tax liability under the old system if they have investments less than Rs. 3,12,500.  Therefore, if you invest less in tax-saving schemes, go for the new regime.

That being said, if you already have in place a financial plan for wealth creation by making investments in tax-saving instruments; medical claims and life insurance; making payments of children’s tuition fees; payment of EMIs on education loan; buying a house with a home loan; and so on, the old regime helps you with higher tax deductions and lower tax outgo.

In light of the above and considering the new income tax regime, if taxpayers want to opt for the concessional tax rates, they may evaluate both regimes.  Hence, it is advisable to do a comparative evaluation and analysis under both regimes and then choose the most beneficial one, as it may vary from person to person.  Read a detailed breakdown on this topic here

When can I opt for old vs new regime?

Income tax rate for domestic companies – fy 2023-24.

*Please refer to the new sections for checking the applicability for the above concessional income tax rates.

• Additional Health and Education cess at the rate of 4 % will be added to the income tax liability in all cases.
• Surcharge applicable for companies is as below:
• 7% of Income tax where total income > Rs 1 crore,
• 12% of Income tax where total income > Rs.10 crore,
• 10% of income tax where domestic company opted for section 115BAA and 115BAB.

Income tax rate for Partnership firm or LLP as per old/ new regime.

A partnership firm/ LLP is taxable at 30%.             NOTE:

• 12% Surcharge is levied on income is more than Rs 1 crore
• Health and Education Cess at the rate of 4% will be applicable
• No concessional rates are introduced for firms LLPs in the next tax regime

Income tax slab rates for FY 2019-20, FY 2020-21, FY 2021-22 and FY 2022-23

Income tax slab for individual aged below 60 years & huf.

• Income tax exemption limit is up to Rs 2,50,000 for Individuals, HUF below 60 years aged and NRIs
• Surcharge and cess will be applicable as discussed above 
• An additional 4% Health & education cess will be applicable on the tax and surcharge amount

Income tax slab for Individual aged above 60 years to 80 years

• Income tax exemption limit is up to Rs.3 lakh for senior citizens aged above 60 years but less than 80 years.
• Surcharge and cess will be applicable as discussed above

Income tax slab for Individual aged more than 80 years

Income tax slab fy 2019-20, fy 2020-21, fy 2021-22 and fy 2022-23 for domestic companies.

• Cess: 4% of corporate tax
• Taxable income is more than 1 Crore but less than 10 Crores: 7%
• Taxable income is more than 10 Crores: 12%

FY 2018-19: Income Tax Slab Rates                                             

• An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
• 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
• 15% of income tax, where the total income exceeds Rs.1 crore.

Income tax slab for Individuals aged above 60 years to 80 years

• 15% of income tax, where the total income exceeds Rs.1 crore. 
• 5% of income tax, where the total income exceeds Rs.1 crore

Income Tax Slab for Domestic Companies FY 2018-19

• Cess: 4% of corporate tax.
• Taxable income is more than 1 Crore but less than 10 Crore: 7%
• Taxable income is more than 10 Crore :12%

FY 2017-18: Income Tax Slab Rates 

Income tax slab for individual below 60 years & huf.

• An additional 4% Health & education cess will be applicable on the tax amount calculated as above
• 10% of income tax, where total income exceeds Rs. 50 lakh up to Rs. 1 crore.
• 15% of income tax, where the total income exceeds Rs. 1 crore.
• 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore

Income Tax Slab for Domestic Companies FY 2017-18

• In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax.
• Taxable income is more than 10 Crore: 12% 

Related Articles: 1. Old vs New Tax Regime 2. Section 115BAC of Income Tax Act 3. Income Tax Changes From 1 April 2024: New Tax Regime Will Be Default 4. Form 10-IEA Purpose, Applicability, How to Fill & Submit Form How To Save Tax: How to Save Tax for Salary Above 7 Lakhs? How To Save Tax For Salary Above 10 Lakhs? How to Save Tax for Salary Above 12 Lakhs? How To Save Tax For Salary Above 15 Lakhs? How To Save Tax For Salary Above 20 Lakhs? How To Save Tax For Salary Above 30 Lakhs? How To Save Tax For Salary Above 50 Lakhs? How to Save Tax For Salary Above 1 crore?

Frequently Asked Questions

For FY 23-24, taxpayers have the option to select between two tax regimes: the old tax regime or the new one.

No, the new tax regime does not allow many deductions and exemptions which are otherwise available in the old tax regime. Deductions u/s 80C cannot be claimed if the taxpayer is opting for a New tax regime.

Taxes are collected by the Government through three means: 

• Voluntary payment by taxpayers through various designated Banks. For example, Advance Tax and Self Assessment Tax payments,
• Taxes deducted at source [TDS] and 
• Taxes collected at source [TCS].

Yes, there are separate slab rates under the old tax regimes. However under the new tax regimes, there is no categories as such.

Even if your income is below the exemption limit, you must file your ITR if any of  these conditions  apply to you.

No, the due date for all the taxpayers is not the same. For individual taxpayers for whom tax audit is not applicable, the due date is 31st July of the assessment year unless extended by the government.

Section 87A is a legal provision which allows for tax rebates under the Income Tax Act of 1961. The section, which was inserted through the Finance Act of 2013, provides tax relief for individuals earning below a specified limit. Section 87 A provides that anyone who is residing in India and whose income does not exceed Rs 5,00,000 is eligible to claim a rebate. Thus full income tax rebate is available to individuals with less than Rs 5 Lakh of total taxable income under the old regime, whereas under the new tax regime, the income limit is Rs. 7,00,000. This rebate is applicable only to individuals and not companies, etc and is calculated before adding the health and educational cess of 4 %.

Yes, IT slab rates can be changed by the government. If there are changes in IT slab rates for the financial year, then they are introduced in the Budget and presented in Parliament.

The Income-tax law has two important terms: (i) Previous year and (ii) Assessment year. It is extremely important for determining the taxpayer's income and tax payable amount.         (i)  Previous year:  The previous year is the year in which the income is earned which typically starts on 1st April and ends on 31st March. Whereas, the year immediately following the previous year (1st April to 31st March) is known as ‘Assessment Year’.            For example,  the current previous year is from 1st April 2023 to 31st March 2024, i.e. FY 2023-24. The corresponding assessment year is 1st April 2024 to 31st March 2025, i.e. AY 2024-25.

To submit your income tax return online, log on to either the income tax e-filing portal or you can also e-file through  Cleartax . For e-filing through the income tax portal, log in to www.incometax.gov.in. You can also download the offline JSON utility and file the ITR. Remember to verify the return within 30 of filing the ITR. ITR filing is incomplete without verification, failure to verify the return will be deemed that you have not filed the return at all.         Please click  here  to read the step-by-step guide on how to e-file ITR on the income tax e-filing portal.

Income tax law has prescribed a basic exemption limit for individuals up to which the taxpayers are not required to pay taxes. Such a limit is different for different categories of taxpayers under old tax regime. Individual below 60 years of age are not required to pay tax upto the income limit of Rs 2.5 Lakh. Individuals above 60 years but less than 80 years of age are not required to pay tax upto Rs 3 lakh of income. Individuals above 80 years are not required to pay tax upto Rs 5 lakh of income. The basic exemption limit for all the individuals under the new tax regime is Rs 3 lakh, irrespective of age.

The surcharge is a tax on tax . Hence surcharge is calculated on the tax payable and not on the income earned. For example, if you have an income of Rs 1000 with 30% tax of Rs. 300, if the income is subject to surcharge then 10% surcharge would be levied on tax of Rs. 300 i.e. Rs 30. Surcharge is levied at different rates i.e 

• 10% is levied is total income is > 50 lakh, 
• 15% is levied if total income is more than 1 crore, 
• 25% of income if total income is > 2 crores.

Individual above the age of 60 years is regarded as a senior citizen whereas an individual above 80 years is regarded as a super senior citizen for the purpose of income tax.  Senior citizens and super senior citizens  have been provided higher tax exemption limits and specific benefits by the income tax law in order to provide some relief.

The income tax payment facility has been migrated from OLTAS to the 'e-Pay Tax' facility of the e-filing portal. You can refer to  this step-by-step guide  for making your tax payments.

Any income which is generated from agriculture or its allied activities will not be taxed. However, it will be considered for determining the tax rate while calculating tax on any non-agricultural income that you may have.

No tax is payable since tax rebate is available upto Rs. 5 lakh under old regime and Rs. 7lakh under new regime.

No tax is payable under the new tax regime up to Rs. 7 lakh. 

New Regime: 62,400

Old Regime: 1,17,000

New Regime: 1,56,000

Old Regime: 2,73,000

New Regime: 3,12,000

Old Regime: 4,29,000

These taxes have been calculated based on the assumption that they are Net Taxable Income after deducting all deductions. However, you may add your exact income details on  this  simplified income tax calculator to find out the exact tax payable. If you are calculating for FY 2023-24, make sure to select the correct financial year.

Taxpayers have the freedom to select the tax regimes, if one needs to opt for the old regime and claim deductions, exemptions, and losses must file their income tax returns by opting out of the new regime.

For employees, the choice needs to be made at the beginning of the year and can be modified at the time of  ITR filing . However, if you are engaged in business or profession, the option to switch to the Old Tax regime is available only once in your lifetime. We recommend that you carefully  evaluate your tax outgo  under both regimes and then select the one which is most beneficial to you.

The income tax return needs to be verified post submission. It is applicable for all types of return original, belated, revised or updated return. It is mandatory to do verify the return within 30 days from the date of filing. Failure to verify the return will be deemed that you have not filed the return at all. One can do the verification either by physically by appending the signature on the ITR acknowledgement form (ITR V) manually and sending it to CPC, Bengaluru by courier or post OR electronically via Aadhaar OTP or EVC (electronic verification code) or Digital signature during or after the submission of Income tax return.

Yes, the standard deduction is allowed under the new tax regime for FY 2023-24. However, it was not allowed as a deduction for FY 2022-23. The new tax regime is introduced and made applicable from FY 2021-22.

One can claim a few selective deductions under the new tax regime for FY 2023-24, such as a standard deduction of Rs.50,000, interest on Home Loan u/s 24b on let-out property, employer’s contribution to NPS u/s 80CCD, Contributions to Agniveer Corpus Fund u/s 80CCH, Deduction on Family Pension Income (lower of 1/3rd of actual pension or 15,000).

No, HRA exemption u/s10(13A) is not allowed in new tax regime. Along with that most claimed exemptions are also NOT allowed such as Leave Travel Allowance (LTA), Exemption on voluntary retirement 10(10C), Exemption on gratuity u/s 10(10), Exemption on Leave encashment u/s 10(10AA), Daily Allowance, Transport Allowance for a specially-abled person, Conveyance Allowance etc,

There are differential process to opt in for tax regimes between FY 2022-23 and FY 2023-24.

For 2022-23 - default regime is old tax regime

If the total income does not include profit and gains from business & profession  and new tax regime needs to be opted , then one must file Form 10IE (online form from Income Tax portal) before the submission of income tax return by clicking Yes for “Do you opt for sec 115BAC(1)?”, else one must file income tax return only without the requirement to file Form 10IE.  In both the scenarios return must be submitted within the due date.

For 2023-24 - default regime is new tax regime

If the total income does not include profit and gains from business & profession  and new old regime needs to be opted , then one must file Form 10IEA (online form from Income Tax portal) before the submission of income tax return by clicking Yes for “Do you opt out from sec 115BAC(1A)?”, else one must file income tax return only without the requirement to file Form 10IEA.  In both the scenarios return must be submitted within the due date.

About the Author

Ektha Surana

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

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Difference Between Old vs New Tax Regime

Bharti Vasvani

The Finance Minister, Nirmala Sitharaman presented the Budget 2020 on the 1st of February 2020. Finance Minister had many major announcements including the introduction of the New Tax Regime.

The new tax regime was introduced to simplify taxes and reduce the burden of compliance on taxpayers. The major difference between both of these tax regimes is income tax slab rates as well as the ability to claim exemptions and deductions.

Even 2 years post the introduction of the New tax regime under section 115BAC , the majority of taxpayers filed their ITR under the old tax regime. Hence to promote this new regime in Union Budget 2023-24 the tax slabs were revised for the new regime along with other changes.

Tax Slab Rates

Changes in deductions and exemptions under the new tax regime, changes under income from house property in the new tax regime, deductions for business expenditure under new tax regime, comparison of old and new tax regimes, pros & cons of new tax regime.

Under the New Regime, new tax slabs were introduced with existing rates which are slashed on income up to INR 15 Lakh. The tax slab rates as per the ‘New Income Tax Regime’ and ‘Old Income Tax Regime’ are as follows:

Basic Exemption Limit

Under the new tax regime, the basic tax exemption limit will remain the same for all assesses including senior citizens. Therefore, in case you opt for the new regime, there will be no higher tax exemption for the senior and super senior citizens.

According to the announcement made in the Budget 2020, there have been major removals of tax exemptions and deductions. This has made tax compliance less tedious. Here is the list of what deductions have stayed and what deductions have been removed:

Changes in Deductions on Home Loan interest – Section 24(b)

No claim of home loan Interest on Self Occupied House Property:  Individuals who have taken a home loan on their  self-occupied property  and are paying interest on it, can not claim that interest deduction under Section 24(b) .

A claim of home loan Interest on Rental House Property:  Under the new income tax regime, individuals can claim interest on home loans for let-out property  only up to the amount of their rental income declared under the head house property income.

The setting off of losses from house property income

As per the new income tax regime,  losses from house property can only be set off against other  income from house property . Moreover, losses from income from house property  cannot be carried forward in the new income tax regime .

Deduction for first-time Homebuyers

Deduction u/s 80EE & Section 80EEA gives relief on interest paid on home loans for first-time home buyers. This deduction is  no longer available for taxpayers  following the new income tax regime.

Following deductions and exemptions not allowed for business income:

• Additional  depreciation  under section 32.
• Investment allowance under section 32AD
• Sector-specific business deductions under sections 33AB and 33ABA
• Expenditure on scientific research under section 35
• Capital expenditure under section 35AD
• Exemption under section 10AA for SEZ units

Setting-Off Business/Profession Loss

In the case of a business income, an individual/ HUF cannot set off the brought forward business loss or unabsorbed depreciation. Further, they cannot carry forward these B&P losses and unabsorbed depreciation relating to deductions/exemptions withdrawn under clause (i) of sub-section (2) of  section 115BAC .

In simple terms , you can carry forward short-term & long-term capital losses and derivatives trading losses in the new tax regime. Since, only the losses relating to deductions & exemptions withdrawn under  clause (i)  of sub-section (2) of section 115BAC cannot be set off or carried forward, for eg: House property losses, additional depreciation, etc.

There cannot be a straight answer to the question that which tax regime is better to opt for. It depends on each taxpayer’s situation and financial position. Looking at the reduction in tax rates new system looks better but due to the non-availability of various deductions or exemptions, it is advisable to do a comparative evaluation under both regimes before you opt for the new regime or decide to continue with the old one.

Here are some examples of how much tax a person must pay in the old and new regimes without any exemptions for the same salary.

A PERSON WITH AN ANNUAL INCOME OF INR 7,50,000

Suppose a person aged 45 years is having an income of INR 7,50,000 which includes INR 3,50,000 from Salary, INR 2,00,000 profit from trading, INR 50,000 Interest on FDs, and the remaining INR 1,50,000 dividend. He has made an investment of INR 1,50,000 under section 80C and INR 20,000 under section 80D.

The following table shows the tax calculation under different regimes:

A PERSON WITH AN ANNUAL INCOME OF INR 20,00,000

Suppose a person aged 50 years is having an income of INR 20,00,000 which includes INR 16,00,000 from Salary, INR 2,00,000 profit from trading, INR 50,000 from Interest on FDs, and the remaining INR 1,50,000 dividend. He has made an investment of INR 1,50,000 under section 80C and INR 20,000 under section 80D.

Moreover, Taxes on incomes taxable at special rates such as long-term and short-term capital gains will be the same in the new as well as old regime.

This table below gives a broad idea about the tax slab based on the income range applicable up to AY 2023-24:

• Reduced tax rates and compliance:  The new regime provides for concessional tax rates. Further, as most of the exemptions and deductions are not available, the documentation required is lesser, and filing taxes is simpler.
• Under the new regime, the benefit of deduction/allowances would not be the criteria for availing the tax exemption. This may be helpful for those categories of taxpayers who may not subscribe to the specified modes of investments, as most of the investments have a lock-in period, before which it cannot be withdrawn. They can invest in open-ended mutual funds/instruments/deposits, which provides them with good returns as well as the flexibility of withdrawal as well.
• The reduced tax rate would provide more disposable income to the taxpayer, who could not invest in specified instruments due to certain financial or other personal reasons.
• The existing tax regime restricts the investment choices for the taxpayer as they have to make the investments only in the instruments specified. However, the new regime provides taxpayers with the flexibility of customizing their investment choices.
• The new tax regime does not allow the taxpayer to avail of certain specified deductions.
• Since investment schemes will not provide any tax benefits under chapter VI-A.

Yes, you can claim an interest deduction against rental income earned from both of them under the new tax regime.

If an individual forgets to fill the form i.e. Form 10-IE, at the time of filing ITR, then they may be disallowed the tax rates available under the new tax regime. The tax department will calculate their income tax liability based on the existing/old tax regime up to AY 2023-24. However as in Budget 2023 new regime is announced as default, from AY 2024-25 ITD shall process ITR under old tax regime if not specifically opted for old tax regime.

Got Questions? Ask Away!

These year i will go for Old Tax Slab. since 80G & Other Stock Brokage Charges. But for Next Year i want to OPT For New Tax Slab as it is Best.

But whatever My Loses in Short Term Capital Gain for these Year. Can i carry forward STCG Loses in New Tax Slab.

Since these year i will use Old Tax Slab & Next Year i will Use New Tax Slab…

Hi @Aadil_Nakhwa ,

Irrespective of any regime you’re opting for, you’re eligible to carry forward your short-term capital losses.

Hope this helps.

Is deduction upto Rs.10,000/- on savings account, applicable under Sec 80TTA, available under the new tax regime, be it AY 2023-24 or 2024-25?

Hi @gdshan ,

As per the Income Tax Act, deduction on savings account interest under section 80TTA is only available in the old tax regime.

hence, if you opt for a new tax regime, you’re not eligible to claim such a deduction.

Hope it helps.

Thanks for clarifying.

Hi @Heath_Slayer

FY 2023-24 onwards, the standard deduction of ₹50,000 will be available under the new regime as well. Also, the tax rebate limit has been raised to 7 lakhs under the new regime.

Considering there are no other deductions, the new regime will be beneficial as the tax liability comes to nearly ₹0. If in case tax liability arises as well, the tax rates have also been revised, so tax liability under the new regime will be less than the old regime.

I am working in a private company. Also I have done intraday trading in FY2022-FY2023 (Jan 2023-Mar2023). I am going to file ITR3 with old regime (Old regime was done through TDS.)

For FY2023-2024 , I am planning to shift to new regime (That looks beneficial for me as of now). Will I be able to switch back to old regime may be few years down the line? If yes, how many times?

Please explain regarding switching of regimes for a person who works in private company and doing intraday trades at same time?

A resident individual can switch regimes every year only if he has no business income. If you’re working in a private company and also involved in intraday trading, which is a speculative business income, you will not be able to switch regimes more than once.

Read more about switching regimes .

Hi @Shrutika_Shah

I report my income under “income from business” and I do not have salary income. For the AY 2023-24, can I choose filing ITR3 under new tax regime now? I did not file form10E as yet.

Also, can you please guide on which business should I choose for an F&O trader while filing Form 10IE

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Last Updated on 12 months by Zainab Hawa