Income Tax Return: Settling The Old vs New Tax Regime debate

Finance Minister Nirmala Sitharaman announced a new simplified tax regime for personal taxpayers. However, it depends upon person to person which tax rates are beneficial to go ahead with.” Income Tax Slab for New FY 2020-21 New Tax Rate Old Tax Rate Upto Rs 2.5 Lakhs NIL NIL Rs 2.5- Rs 5 Lakhs 5% 5% Rs 5- Rs 7.5 Lakhs 10% 20% Rs 7.5 -Rs 10 Lakhs 15% 20% Rs 10 - Rs 12.5 Lakhs 20% 30% Rs 12.5 - Rs 15 Lakhs 25% 30% Above Rs 15 Lakhs 30% 30% Whereas, CA Gopal Kumar Kedia says- “In this Budget, Government gave the option to Individuals to opt either exemption and deductions free taxation system or otherwise, whichever is more beneficial to them. Individuals will have more liquidity in their hand in the new regime of taxation and corruption and bribery will be eliminated.” The difference between New and Old income tax regime: If an individual wish to avail the new tax rates as announced by Budget 2020, he/ she will not be eligible to claim the following tax benefits: Leave travel concession as contained in clause of section 10 House rent allowance as contained in clause of section 10 The allowances as contained in clause of section 10 Standard deduction of Rs. Still have to pay 22.5K for tax Either pay 40 K with new slab or invest 1.5 lakh under 80C and others, 50K in NPS to save the tax,. Still have to pay 22.5K for tax Salary 9 lakh: Either pay 60 K with new slab or invest 1.5 lakh under 80C and others, 50K in NPS,, and still pay 42.5 K “Above calculations suggest that old tax rates with exemptions and deductions are a better option for those individuals having higher income bracket,” says Sood.