New Tax Regime Vs Old Tax Regime -INCOME TAX 2020-21 Which Regime is Better. Finance Minister has announced a New Tax Regime from this financial year 2020-21. The budget 2020 saw the finance minister Nirmala Sitraman announce a new tax regime with more tax slabs (www.apteachers.in) and lower tax rates. This was long demanded by most taxpayers, but it came with the catch of removal of all the deductions and exemptions available. The Finance Minister gave Tax Payers a choice between the New Tax Sab and Existing Tax Slab, leaving it to the Tax Payers which one they opt for. Now let us see the comparison of the Tax Slabs in New and Old Systems. Income tax: Comparison of new income tax regime with old tax Regime.
In the "old tax regime," there are 120 exemptions. Taxpayers do not benefit from all of them. Most of them complicate the direct tax system. After a thorough study, the Ministry of Finance has removed around 70 exemptions.
Now the question is if you opt for the new tax regime, what are the exemptions and deductions you wouldn’t be able to claim further? Here’s a list
New Tax Regime or Old Tax Regime -INCOME TAX 2020-21 Which Regime is Better
Here is the detailed comparison of New and Old Tax Slabs Table for better understanding.
| Income slabs (Rs) | Tax Rate (Old Regime) |
Tax Rate (New Regime - devoid of exemptions & deductions) |
|---|---|---|
| Up to 2.5 lakh | Nil |
Nil |
| 2.5-5 lakh | 5% |
5% |
| 5-7.5 lakh | 20% |
10% |
| 7.5-10 lakh | 20% |
15% |
| 10-12.5 lakh | 30% |
20% |
| 12.5-15 lakh | 30% |
25% |
| Above 15 lakh | 30% |
30% |
Though the Tax Rates seems to be lower in this New Regime.. we have to keep in mind that NO DEDUCTIONS AND EXEMPTIONS are allowed in New Regime.
The Deductions which are allowed in Existing Tax Regime, like 80C,80D,80E,80G,HRA, Housing Loan Interest and all other are removed in New Tax Regime. The Gross will be the taxable income.
In the "old tax regime," there are 120 exemptions. Taxpayers do not benefit from all of them. Most of them complicate the direct tax system. After a thorough study, the Ministry of Finance has removed around 70 exemptions.
Now the question is if you opt for the new tax regime, what are the exemptions and deductions you wouldn’t be able to claim further? Here’s a list
- Leave Travel Allowance
- House rent allowance.www.apteachers.in
- Standard deduction of Rs 50,000 that was available for salaried individuals
- Deductions available under Section 80TTA/TTB ( on interest from savings account deposits )
- Entertainment allowance deduction and professional tax ( For government employees)
- Tax relief on interest paid on home loan for self-occupied or vacant property u/s 24
- Deduction of Rs 15000 allowed from family pension under clause (iia) ( Section 57)
- Tax-saving investment deductions under Chapter VI-A (80C,80D, 80E,80CCC, 80CCD, 80D, 80DD, 80DDB,, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc) (Except, deduction under Section 80CCD(2)—employers contribution to NPS, and Section 80JJA) and so on. These popular tax saving investment options include ELSS, NPS, PPF, tax break on insurance premium among others.
Here is an Detailed Example New Tax Regime or Old Tax Regime
