Tax estimations: The Union Budget 2024 has actually presented a brand-new tax obligation regimen with upgraded revenue tax obligation pieces to give even more tax obligation alleviation contrasted to the previous tax obligation system. Individuals might question exactly how to figure out which tax obligation regimen is much more useful for them. The choice will certainly rely on the particular reductions that each taxpayer can declare to make sure that their tax obligation obligation is reduced under the old regimen than the brand-new one.
One must keep in mind that there have actually been no adjustments to the revenue tax obligation regulations, pieces, and prices in theOld Tax Regime However, some adjustments were made to theNew Tax Regime
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The recommended adjustments under the brand-new tax obligation regimen consist of:
> > Adjustments to the revenue tax obligation pieces in the New Tax Regime
> > An boost in the basic reduction limitation to Rs 75,000 from Rs 50,000, causing a Rs 25,000 raising
> > An boost in the basic reduction offered to family members pensioners to Rs 25,000 from Rs 15,000, causing a Rs 10,000 raising
> > An boost in the reduction on company’s NPS payment to worker’s account to 14% from the previous 10% limitation.
The brand-new revenue tax obligation pieces revealed in the Budget 2024 are as complies with:
Up to Rs 3 lakh – 0%
Rs 3 lakh to Rs 7 lakh – 5%
Rs 7 lakh to Rs 10 lakh – 10%
Rs 10 to Rs 12 lakh – 15%
Rs 12 to Rs 15 lakh – 20%
Above Rs 15 lakh – 30%
Overall, the modified tax obligation pieces under the New Tax Regime objective to lower the tax obligation worry for people with gross incomes as much as Rs 10 lakh. Under the recommended brand-new tax obligation regimen, revenue in between Rs 6-7 lakh will certainly be tired at 5%, and revenue in between Rs 9-10 lakh will certainly be tired at 10%, causing a tax obligation financial savings of Rs 5,000.
The basic reduction has actually likewise been elevated to Rs 75,000, implying that revenue as much as Rs 7.75 lakh will certainly not be tired. This modification is anticipated to profit employed taxpayers by Rs 7,500.
In this situation, if the gross income is Rs 7,75,000 and just a basic reduction applies, the tax obligation obligation under the old tax obligation regimen would certainly be about Rs 59,800. However, under the brand-new tax obligation regimen, there will certainly be no tax obligation payable in this scenario.
An employed worker with a complete revenue of Rs 16 lakh will certainly have a taxed wage revenue of Rs 15.5 lakh for FY 2023-24 and Rs 15.25 lakh for FY 2024-25 under the recommended brand-new tax obligation regimen, after basic reduction.
The tax obligation payable for FY 2023-24 will certainly be Rs 1.65 lakh under the present brand-new tax obligation regimen and Rs 1,47,500 under the recommended brand-new tax obligation regimen for FY 2024-25. Including e-cess, the overall tax obligation quantity will certainly be Rs 1,71,600 and Rs 1,53,400 under the present brand-new tax obligation regimen and recommended brand-new tax obligation regimen, specifically.
In the recommended brand-new tax obligation regimen presented in Budget 2024, just the basic reduction of Rs 75,000 is thought about for tax obligation computation. In comparison, the old tax obligation regimen takes into consideration a basic reduction of Rs 50,000 according to revenue tax obligation regulations.
Additional reductions past the basic reduction of Rs 50,000 might consist of HRA tax obligation exception, LTA tax obligation exception, Section 80C, NPS financial investment reduction of Rs 50,000, Section 80D reduction, and various other qualified reductions that the taxpayer might declare.
The adhering to are the minimal reductions, likewise called break-even degrees, that demand to be asserted in the previous tax obligation regimen at different revenue degrees to generate the exact same quantity of tax obligation in both tax obligation routines.
| Gross revenue degree (In Rs) | Min reductions that have to be asserted in old tax obligation regimen | Tax payable in Old Regime | Tax payable in recommended New Tax Regime |
| At 7.75 lakhs | 3,25,000 | – | – |
| At 10 lakhs | 3,50,000 | 44,200 | 44,200 |
| At 12.5 lakhs | 4,31,250 | 79,300 | 79,300 |
| At 15.75 lakhs | 4,83,333 | 1,45,600 | 1,45,600 |
| At 20 lakhs | 4,83,333 | 2,78,200 | 2,78,200 |
Source: EY India
