What should a Salaried Taxpayer choose as New or Old Tax Regime U/s 115 BAC? The Union budget presented in the Parliament in February 2020, the Account Minister proposed a new tax regime as an option in contrast to the existing old tax regime for Individual and HUFS | Since the New Tax Regime is discretionary definitely, a taxpayer currently has a decision to make between the New and Old Tax Regime after a careful comparison supported by facts and figures.
In the above table, it is obviously showing that the new tax regime has proposed lower annual tax rates, for money segments up to Rs 15 lakh, but you need to recall that the proposed lower tax rates will be appropriate just in the event that you are happy to surrender exemptions and deductions accessible under various provisions of the Personal tax Act, 1961.
You may also like:- Automated Income Tax Excel Based Software Arrears Relief Calculator U/s 89(1) with Form10E for the F.Y.2020-21 and A.Y.2021-22 as per New and Old Tax Regime U/s 115BAC
This means that when you choose the New Tax Regime, you should renounce some exemptions and deductions accessible Under Chapter VI An of the Demonstration that award deductions under Section 80. Indeed, even the Standard Deduction under Section 16 (which is currently Rs 50,000) accessible to salaried individuals and the deduction on home credit interest, under Section 24(b) will be disallowed. Around Seventy exemptions and deductions have been taken out in the New Tax Regime | Some of the 70 exemptions and deductions you won't get in new regime: Leave travel remittance Section 10(5) House lease recompense Section 10(13A),Child Education Allowances, Standard deduction U/s 16(1a), Housing credit interest Section 80C, investments Clinical insurance premium U|S 80D, Expenses actually paid for clinical therapy of specified diseases and ailments U|S 80DDB, Education advance interest U|S 80E, Lease paid for furnished/unfurnished residential convenience U/S 80GG, Deduction in respect of donations to specific funds, beneficent institutions U/S 80G, Interest on deposits in saving account U|S 80TTA, Interest on deposits U/S 80TTB for senior citizens Deduction for an ensured person with a disability by the clinical authority U|S 80U Will the taxpayer acquire by switching to a new regime? The Ministry of Money expects four out of five Pay taxpayers to move to the new tax regime|
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An individual taxpayer can get various tax exemptions and deductions such as house lease stipend and Section 80C deductions may not profit by switching to the new system. The taxpayer will have the option to settle on the decision relying upon their monetary situation and relying upon what is best suitable from a tax arranging perspective. The budget has attempted to put more cash in the hands of taxpayers by curtailing the incentives to save.
Section 80C forces individuals to save, and they will be weaned off savings if there is no tax motivator. The impetus seems to be towards spending, instead of focusing on longer-term monetary security for the taxpayer. A taxpayer who opts for the new tax regime and forgoes tax exemptions may wind up spending cash instead of using it towards their monetary safety and security. You don't actually have to do a detailed calculation to know which regime to choose. The answer is actually quite simple. Anybody guaranteeing tax exemptions and deductions of more than Rs 2.5 lakh in a year won't acquire from the new structure. The maximum of Rs 2.5 lakh includes the standard deduction of Rs 50,000 U/s 16(1a) for which no investment is required.
All salaried taxpayers are qualified for this, which leaves just an extra deduction of Rs 2 lakh. Of this, Rs 1.5 lakh is dealt with by Section 80C investments. The normal taxpayer also claims an exception for HRA or claims deduction for the interest paid on a home credit. Also, it is, noted that there are various deductions such as the contribution to the NPS, the interest on education loans, treatment of illness and for disabilities. There is also the small but generally guaranteed exception of up to Rs 10,000 for savings bank interest under Section 80TTA.
Feature of this Excel Utility:-
1) This Excel utility prepares and calculate your income tax as per the New Section 115 BAC (New and Old Tax Regime)
2) This Excel Utility has an option where you can choose your option as New or Old Tax Regime
3) This Excel Utility has a unique Salary Structure for Government and Non-Government Employee’s Salary Structure.
4) Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the F.Y.2000-01 to F.Y.2020-21 (Update Version)
5) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2020-21
6) Automated Income Tax Revised Form 16 Part B for the F.Y.2020-21
Disclaimer: Prior to settling on any decisions do consult the experts. The author does not assume any liability for misrepresentation or understanding of act or rules. Neither the author nor the firm accepts any risk for the loss or harm of any sort arising out of data in this document or for any activity taken in dependence subsequently.
