Income Tax Slab: Which of the new and old tax systems is better depends on income and investment, the old system is better for those who invest on 15 lakh income, the new system is better without investment.
Income Tax Slab: Ever since the government has brought the new tax system, a major question has arisen before the taxpayers that which tax system is better for them. Many people are still in dilemma whether they should adopt the new tax slab or the old tax slab will be better for them. It is worth noting that which tax regime will be more beneficial for which person, it mainly depends on the income and investment of the person.
If a person’s annual income is up to Rs 7.5 lakh, then the new tax system will be beneficial as no tax will have to be paid in it. Also, employed people will not need to submit proof of their investment. But, for people whose income is Rs 15 lakh, choosing one of the two regimes becomes a bit complicated. Let us know which regime will be right for people earning Rs 15 lakh.
Tax calculation in old tax slab
If you adopt the old tax slab, you will get the benefit of deduction.
- Standard deduction – ₹50,000
- Total income: ₹15,00,000 – ₹50,000 = ₹14,50,000
- Section 80C (EPF, PPF, ELSS, NSC, children’s tuition fees) – ₹1,50,000
- Remaining income: ₹14,50,000 – ₹1,50,000 = ₹13,00,000
- Investment in NPS (Section 80CCD 1B) – ₹50,000
- Remaining income: ₹13,00,000 – ₹50,000 = ₹12,50,000
- Home loan interest (Section 24B) – ₹2,00,000
- Remaining income: ₹12,50,000 – ₹2,00,000 = ₹10,50,000
- Medical Policy (Section 80D) – ₹50,000 (for senior citizen parents)
- Final Taxable Income: ₹10,50,000 – ₹50,000 = ₹10,00,000
If you invest in this way, your total tax in the old tax regime comes to ₹1,17,000.
Tax calculation in new tax slab
There is no deduction facility in the new tax slab, but a standard deduction of ₹75,000 is available.
- After deducting ₹75,000 from total income:
- ₹15,00,000 – ₹75,000 = ₹14,25,000
If you earn ₹15 lakh per annum and file your return under the new tax regime, your total tax comes to ₹1,30,000.
Which tax slab is better?
If you avail the investment tax deduction, the old tax slab will be beneficial as your total tax comes to ₹1,17,000. If you do not make any investment, the new tax slab is a better option as you will have to pay only ₹1,30,000 as tax, whereas without deduction, the tax in the old slab would be ₹2,57,400.
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