IT Return: If my income is less than 10 lakhs, should I go for old tax regime or new tax regime section u/s 115BAC?
For an income of Rs 10 lakh, the existing tax regime is beneficial.
In case an individual claims lower deductions for tax savings, towards health insurance, investment in NPS and so on, the new regime will be more beneficial as against individuals who utilise the tax saving investments.
Also individuals with an income bracket between Rs.5-10 Lakh with lower claim of deductions will benefit from the new regime whereas individuals falling under higher income tax bracket above Rs.15 lakh of income per annum can benefit more from the existing regime by making tax saving investments.
It is important to note that each taxpayer should calculate income tax, taking into account their tax-saving investments and then choose the regime.
Income (Rs) | Old regime (Rs) | New regime (Rs) | Tax Difference (Rs) | |
Salary | 1,000,000 | 1,000,000 | 1,000,000 | |
Less: Standard deduction | 50,000 | 50,000 | Nil | |
Less: Professional tax | 2,400 | 2,400 | Nil | |
Gross total income | 947,600 | 947,600 | 1,000,000 | |
Less: Deduction u/s 80C | 150,000 | 150,000 | Nil | |
Total income | 797,600 | 797,600 | 1,000,000 | |
Income tax | 72,020 | 75,000 | ||
Add: Education cess @ 4% | 2,881 | 3,000 | ||
Total tax | 74,901 | 78,000 | -3,099 |