WHICH TAX REGIME SHOULD YOU SELECT? ARE YOU CONFUSED?

 


Although the new regime has lower slab rates and fewer exemptions, deductions and exclusions are still a part of the previous regime. Prior to the start of the fiscal year, employees must tell their employers what kind of tax structure they desire.

WHY DO YOU HAVE TO OPT FOR A TAX REGIME? 

Employers are requesting information on the preferred regime from their Employees because the Central Board of Direct Taxes (Circular no 04/2023) made it COMPULSORY for them to do so. The employer will apply the proper TDS fees. In order to avoid the Employer automatically deducting TDS in accordance with the New Tax Regime, you must choose between the New and Old Tax Regimes. It makes no difference whether the taxpayer files an income tax return under the Old or New Income Tax Regimes what the purpose of TDS on Salary is. You can make adjustments before sending your ITR.

TIPS ON WHICH IS THE RIGHT TAX REGIME FOR YOU 

  • For Income up to Rs 7 lakh the New Tax Regime is better 
  • In case you don’t have Tax savings and Deductions to avail then consider the New Tax Regime 
  • In case you have just Rs 1.5 lakh of 80C Deduction then New Tax Regime might be better 
  • In case you have Rs 1.5 lakh of 80C Deduction and also a Home Loan, Old Tax Regime be better for you. 
  • In case you have an HRA Deduction to claim, the Old Tax Regime might be better for you. 

OPTING FOR OLD OR NEW TAX REGIME, WHICH IS WISER?

You'll be able to take advantage of tax deductions and exemptions under the previous tax system. Calculating taxable income will be significantly simpler under the new tax system. Additionally, if you are unable to invest during the fiscal year, the new tax system will assist you in reducing your tax burden.

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