E-Paper
Budget 2024: Old vs new tax regime, which is better for salaried employees?
Budget 2024: In Union Budget 2023, the government introduced crucial changes to encourage taxpayers to adopt the new tax regime.
The new tax regime was introduced in Union Budget 2020 under which the tax slabs were altered and taxpayers were offered concessional tax rates. But taxpayers who opt for the new tax regime cannot claim several exemptions and deductions. These include HRA, LTA, 80C, 80D and more. In Union Budget 2023, the government introduced crucial changes to encourage taxpayers to adopt the new tax regime. These are:
Higher tax rebate limit: Full tax rebate on an income up to ₹7 lakhs has been introduced. This threshold is ₹5 lakhs under the old tax regime. This implies that taxpayers with income up to ₹7 lakhs will not have to pay any tax at all under the new tax regime.
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Streamlined tax slabs in the 2023 changes: The tax exemption limit has been increased to ₹3 lakhs and the new tax slabs are:
Income up to ₹3,00,000- Nil
Income up to 3,00,001- 6,00,000- 5%
Income up to ₹6,00,001- 9,00,000- 10%
Income up to ₹9,00,001- 12,00,000- 15%
Income up to ₹12,00,001- 15,00,000- 20%
Income up to ₹15,00,001 and above- 30%
What about the old tax regime?
The old regime prevailed before the introduction of the new regime under which over 70 exemptions and deductions were available, including HRA and LTA, which can reduce your taxable income and lower tax payments. The most popular and generous deduction is Section 80C that allows for a reduction of taxable income up to Rs.1.5 lakh.
