The Newsfeed

New or Old, what tax regime you should opt for?

New or Old, what tax regime you should opt for?
New or Old, what tax regime you should opt for?

A taxpayer whose deductions and exemption claims are less than Rs 3.75 lakh annually would be advised to opt for the new income tax regime and pay less tax than they gave in the old regime, a senior finance ministry officer said.

The Income Tax Department has arrived at the figure after making due calculations for ensuring a “hassle-free and less tax rate” filing regime for the assessees, he said.

Union Finance Minister Nirmala Sitharaman, while presenting the Budget for 2023-24, said the government has made the new income tax regime more attractive for taxpayers bringing “substantial changes” in its structure for the benefit of the middle class.

According to the changes proposed in the Budget, no tax would be levied on people with an annual income of up to Rs 7 lakh under the new tax regime but it made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as house rent allowance.

“So, a taxpayer who claims deductions less than Rs 3.75 lakh while filing the annual I-T returns will be advised to opt for the new tax regime as declared in the Budget. They will stand to benefit by enjoying the reduced tax slab as stated in the Budget,” the officer said.

The figures have been arrived at after an analysis of the tax filing data, he said.

“We are sure that the number of taxpayers opting for the new regime will be much higher than those who continue to stay in the old system.”

Not many taxpayers can claim deductions on various investments, expenses and loans to the tune of Rs 3.75 lakh per annum, the officer said.

He said the tax department is expected to provide an online calculator, like in earlier times, so that taxpayers can check their individual tax liabilities and subsequently choose the best regime for themselves.

The new regime will “bring down” compliance to be undertaken by taxpayers as they do not have to gather documents and proofs for various investments for providing them to their employers or the I-T Department while filing their returns, the officer said.

Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent, Rs 6 to 9 lakh at 10 per cent, Rs 9 to 12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent.

“This will provide a major relief to all taxpayers in the new regime,” the Union Finance Minister said.

An individual with an annual income of Rs 9 lakh will be required to pay only Rs 45,000. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now (in the old regime), that is Rs 60,000, she said in her Budget speech.

“Similarly, an individual with an income of Rs 15 lakh would be required to pay only Rs 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of Rs 1,87,500,” Sitharaman said.

The minister later told reporters during a press conference that the government wants to make the new tax regime attractive enough and compliance should not be burdensome on taxpayers.

However, if someone feels the old regime is more beneficial, that person can continue in it, she said, adding, “The ultimate interest is to make the simpler (new) regime more attractive.”


The Dispatch is present across a number of social media platforms. Subscribe to our YouTube channel for exciting videos; join us on Facebook, Intagram and Twitter for quick updates and discussions. We are also available on the Telegram. Follow us on Pinterest for thousands of pictures and graphics. We care to respond to text messages on WhatsApp at 8082480136 [No calls accepted]. To contribute an article or pitch a story idea, write to us at [email protected] |Click to know more about The Dispatch, our standards and policies   
New or Old, what tax regime you should opt for?