New Delhi: New financial year kicked in on 1 April 2023. It is important for salaried individuals to choose between new and old tax regimes.You should make your choice wisely as this will directly impact your take-home salary.Based on the selection of the tax regime, your employer will deduct income from your salary. Here are some tips to figure out between both the tax regimes to know what’s best for you.
If your income is up to Rs 7 lakh, then you can enjoy zero tax liability under the new tax regime. Additionally, there is a standard deduction of Rs 50,0000 in the new tax regime.
As per the changes proposed in the Budget, no tax would be levied on people with annual income of up to 7 lakh under the new tax regime. However, no changes were made for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.
You may have to consider opting the new tax regime if you have no deductions to avail, as tax rates are lower and there is no deduction available on investments.
Under the new tax regime, taxpayers have to forgo exemptions, such as Leave Travel Allowance, House Rent Allowance, Tuition Fee, and interest on housing loans, among others.
New income tax slabs
Zero tax: For income up to Rs 3 lakh
5 per cent: For income between Rs 3 lakh – Rs 6 lakh
10 per cent: For income between Rs 6 lakh – Rs 9 lakh
15 per cent: For income between Rs 9 lakh – Rs 12 lakh
20 per cent: For income between Rs 12 lakh – Rs 15 lakh
30 per cent: For income equal to and above Rs 15 lakh
Old income tax slabs
Zero tax: For income up to Rs 2.5 lakh
5 per cent: For income between Rs 2.5 lakh – Rs 5 lakh
15 per cent: For income between Rs 5 lakh – Rs 7.5 lakh
20 per cent: For income between Rs 7.5 lakh – Rs 10 lakh
30 per cent: For income of Rs 10 lakh and above