The new tax regime became the default one from financial year 2023-24. So, most likely, if you didn’t assess which tax regime is better for you, you would be on the new tax regime automatically. The good news is you can still opt for the tax regime that is the most beneficial for you before you file your income tax return (ITR) for FY24.
The new tax regime offers concessional tax rates, but doesn’t allow individuals to claim deductions under Section 80C, 80D and others, except standard deduction of ₹50,000. But it also offers a tax rebate of ₹7 lakh, making income up to that level tax-free. The old tax regime continues to reduce taxable income using deductions and exemptions.
If you haven’t already done so, this is the right time to choose your tax regime, as time is running short as you need to file your ITR by July 31, failing which you will have to pay a penalty on any pending tax. Do remember that while earlier, the income tax department typically used to extend the last date of filing returns, that didn’t happen last year.
We have chosen five common scenarios in which people end up asking the same question: should I go for the old tax regime or the new? We hope the analysis of these scenarios will answer the question.
Scenario 1: I maximise all my Section 80C deductions and have a home loan too. I also get a part of my salary as reimbursement.
There are two aspects that you will need to consider in this scenario to decide whether you should stay in the old regime.
This story is from the July 2024 edition of Outlook Money.
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This story is from the July 2024 edition of Outlook Money.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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