The new monetary year is right here, and if you are a salaried taxpayer, it is a great time to think about which income tax regime you have to pick.
The government has made the
The new tax regime is more attractive with concessional tax slabs.
And plenty of people are finding it to be the higher alternative now. Let's examine how.
decrease TAX costs underneath NEW REGIME
One big gain of the new tax regime is the lower tax prices compared to the old device.
Underneath the brand new regulations delivered in price range 2025, in case your earnings are above Rs 24 lakh, you may pay a maximum of 30% tax. In case your income is between Rs 20 and Rs 24 lakh, then the tax fee is 25%.
If your income is between Rs 16 and Rs 20 lakh, the tax price is 20%, while 15% is levied when your profits are between Rs 12 and Rs 16 lakh. Tax quotes of 10% and 5% are relevant while earnings are between Rs 8 lakh and Rs 12 lakh and between Rs 4 lakh and Rs 8 lakh, respectively, while 0 tax is charged on profits as high as Rs 4 lakh.
Conversely, below the antique tax regime, the 30% tax rate is levied a whole lot in advance, as soon as your earnings cross Rs 10 lakh.
Finance minister Nirmala Sitharaman in her budget 2025 speech stated, "A taxpayer in the new regime with an income of 12 lakh gets a benefit of Rs 80,000 in tax (that's one hundred percent of tax payable as in keeping with existing charges). Someone having an income of Rs 18 lakh gets a benefit of Rs 70,000 in tax (30% of tax payable as in line with present rates). A person with an income of Rs 25 lakh gets an advantage of Rs 110,000 (25% of his tax payable as per existing costs).
Sincerely, the decreased tax rates make a massive distinction for plenty.
More TAXPAYERS selecting NEW REGIME
Already,
Approximately seventy-two percent of taxpayers have opted for the brand-new tax regime.
whilst filing ITRs for AY 2024-25, as in step with a round launched by the Ministry of Finance dated august 2, 2024.
Now, with 0 taxes up to Rs 12 lakh income, CBDT expects over ninety percent of taxpayers to move to the brand-new gadget, which reflects that the shift in the direction of the new regime is developing robustly.
higher preferred DEDUCTION
The brand-new tax regime also offers a better widespread deduction. final 12 months, it changed from Rs 50,000 to Rs 75,000 for salaried personnel. In the vintage regime, the usual deduction stays at Rs 50,000. This greater deduction allows you to bring down your taxable income even further below the brand-new regime.
DEDUCTIONS nonetheless available IN NEW TAX REGIME
While the brand-new tax regime has eliminated a number of the not unusual deductions, a few critical ones still remain, which include an organization's NPS contribution, below section 80CCD(2), in which the deduction changed to an elevated 14% of the revenue in 2024, up from 10%.
Also, contributions in the direction of the Agiveer Corpus Fund underneath segment 80CCH are deductible.
Moreover, gratuity and departure encashment received upon retirement also are tax-exempted under the new regime.
But, in case you make investments closely below phase 80C for PPF and ELSS and in section 80D for health insurance, etc., then you might discover the antique tax regime is more appropriate.
If the antique regime saves you more money, you can still go with it. Otherwise, the new tax regime might be the smarter and simpler choice.
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