Income tax return (ITR) submitting season is again and the taxpayers have two extra months to go for submitting their tax returns earlier than the July 31 deadline. As the brand new tax regime is the default regime now, taxpayers who wish to file their return below the previous tax regime – are supposed to go for it individually.
These are a few of the elements which ought to weigh in your determination of selecting one regime over one other – be it previous or new tax regime.
New Tax Regime: Weigh these elements
I. Deductions: If a taxpayer has invested in a slew of tax-saving devices that are allowed below section 80C, 80D and 80DD, amongst others – then it is suggested to go for the previous tax regime. Also examine level (4).
II. Higher rebate: Since taxability kicks in at a better threshold within the new tax regime, it’s advisable to maintain the default regime in case your annual wage is upto ₹12.75 lakh for FY 2024-25.
“Choosing old or the new tax regime mainly depends upon how much deductions and exemptions are available with you. Upto a salary of ₹12.75 lakhs, you can go with the New Tax Regime (NTR). Also in case – you are not having any HRA, home loan, leave travel allowance (LTA), it is highly likely that the New Tax Regime will turn out to be best for you,” says CA Pratibha Goyal, associate, PD Gupta & Co, a Delhi-based agency.
III. HRA: Another key advantage of choosing the brand new tax regime is the exemption towards home hire allowance (HRA). Among a number of advantages, one of many predominant benefits of choosing the previous tax regime is that it allows you to declare exemption for HRA.
Under the previous tax regime, HRA is exempted below part 10(13A) of Income Tax Act for salaried people whereas this exemption will not be out there within the new tax regime.
IV. Calculator: Income Tax division has shared Income Tax calculator to the place one can discover out which tax regime is useful over different. As you enter the earnings particulars below varied heads – you’ll be able to compute earnings tax below each the heads individually. As a consequence, you’ll be able to select the regime which supplies the decrease tax computation.
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