24 September 2020
Are you wondering which tax regime you should opt for? While there is no clear-cut solution to the same, this blog post may go some ways in providing some clarity to this question. We shall detail the new tax regime and have shared the download link to a simple tax calculator prepared by us.
The Budget 2020 has brought a unique concern to the taxpayers through announcement of a new tax regime. It offers more tax slabs and lower tax rates. This was long demanded by most taxpayers, but it came with the catch of removal of all the deductions and exemptions available.
To add to this confusion, the finance minister gave taxpayers a choice between the new regime and existing one, leaving it to the citizens to decide on the basis of their preference. Instead of providing simplicity, understanding the tax regime in India may have become more complex.
Let us understand the new tax regime and what does it bring as a package.
The New tax regime is applicable to resident Individuals and HUF (“Hindu Undivided Family”), from the Financial Year 2020-21.
Health and Education Cess and Surcharge provision remains the same irrespective of the option chosen.
Tax payers can either choose to continue with existing tax system or select the new tax regime.
There are various benefits to this, some of them listed below:
Under this scheme, there is a list of exemptions/ deductions that have been withdrawn. Here is the list of exemptions/deductions not available anymore - Click.
Currently, under the old regime, the exemptions/ deductions allow you to lower your tax amount by investing, saving, or spending on specific items. However, it also means every year you have to find ways to optimize your salary and savings/investments so as to keep your taxable income to the minimum.
So basically, every person will have his own unique New Tax Slab Vs Old Tax Slab calculations as the deductions claimed by the person may be unique to him. Each individual tax payer ideally has to do their own calculations and depending on the amount of deductions/ exemptions being claimed, it is better to pick the better one between the two.
Here are steps you can follow:
We have created a simple tax calculator which will help you to determine your tax liability under both the tax regime considering the steps above.
You can access the calculator here – Download Tax Calculator
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