Income Tax Regime: The government has given taxpayers the option to select either the new or old tax regime while filing ITR. Most of the taxpayers still select the old tax regime.
Old Tax Regime vs New Tax Regime: If you also file ITR every year, then you should have detailed information about old tax regime and new tax regime. If you are going to file income tax return for the first time then this is even more useful for you. Actually, there are many people who are still confused about the old and new tax regime and which regime they should select. The new tax regime was introduced by the Finance Ministry in April 2020.
Higher leave encashment facility
The government made some changes in the new tax regime in the budget of 2023-24 to encourage more people to choose it. In these changes, facilities of streamlined tax slab, higher tax exemption limit, standard deduction, family pension deduction and higher leave encashment were provided. Even after the Finance Ministry made changes in the new tax regime, the government did not abolish the old tax regime. The old tax regime continues without any change.
The government has given taxpayers the option to select either the new or old tax regime while filing ITR. Most of the taxpayers still select the old tax regime. However, many people are confused about the new and old tax regime. The selection of tax regime depends on the claims and exemptions claimed by you.
For whom is the old tax regime best?
If you invest in tax saving schemes then the old tax regime is good for you. But if you do not invest in any kind of tax saving scheme, then the new tax regime may prove to be better for such people. The tax rates for taxpayers under the new tax regime are comparable to the old regime. Under the new tax regime, no taxpayer gets tax rebate on the basis of section 80C, 80D, HRA etc.
Who is the New Tax Regime for?
Generally, any person falling in the higher tax slab and availing limited deductions and exemptions prefers to select the option of New Tax Regime. But if you are into tax saving schemes like PF, PPF, Equity Linked, ELSS etc. then the old tax regime can prove to be more beneficial.
Old Vs New Tax Regime:
In the budget presented by the Central Government on 1 February 2023, the new tax regime was made attractive to promote it. In this, the gift of standard deduction was given by the government. Apart from this, the tax rebate limit was increased to Rs 2 lakh. Whereas no change was made in the old tax regime. Now if your question is that which is better among the two, then the simple answer is that under the old tax regime, there is exemption to invest under various provisions of Income Tax ranging from 80C. If you also invest in different schemes then the old tax regime is more beneficial for you. But if you do not invest then the new tax regime is best for you.
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