Choosing Between Old And New Income Tax Regimes? 5 Things To Consider

Choice between the new and old tax regime is completely dependent on individuals based on their investment instruments and how they want their ITR tailor made for their preference. However, you could consider these 5 things when comparing new and old tax regime. This is not an expansive list, but can give you an idea while you sit to compare both the tax regime.

Deductions is what sets new and old income tax regimes apart and that's also the primary distinction between them other than differential tax slabs.

Standard deductions under both regimes were the same so far @ Rs 50,000. However after the Budget 2024 announcement, the standard deductions under the new tax regime have been hiked to Rs 75,000.

The deductions and exemptions are important in lowering your taxes. Under the Old regime, you can avail of benefits of approximately 120 exemptions. On the other hand, the new one offers few concessions.

The calculation of taxes under both regimes is different due to the difference between their tax slabs. In New tax regime, as per the latest Budget 2024 announcement there is zero tax on 0 to Rs 3 lakhs, 5% tax on income up to Rs 3-7 lakh, 10% tax on income up to Rs 7-10 lakh, 15% tax on income up to Rs 10-12 lakh, 20% tax on income up to Rs 12-15 lakh and 30% tax on income above Rs 15 lakh under the new tax regime.

Old Tax Regime Tax Slab

Up to Rs 3,00,000: Nil (Income Tax Rate)

Rs 3,00,001 - Rs 5,00,000: 5% above Rs 3,00,000 (Income Tax Rate)

Rs 5,00,001 - Rs 10,00,000: Rs 10,000 + 20% above Rs 5,00,000 (Income Tax Rate)

Above Rs 10,00,000: Rs 1,10,000 + 30% above Rs 10,00,000 (Income Tax Rate)

Failing to opt for the tax regime, would mean that new income tax regime will be the default option. So, inform your employer regarding the same.