Everyone doesn't need to pay tax. It is based on our capacity. If our income is High and if we have to show it to the government then it is important to pay the tax. You are not required to pay the tax If your income is between 5 lakhs. But you should pay the tax if your income is more than 7 lakhs to the government every financial year.
WHAT IS EXISTING TAX REGIME AND DEFAULT TAX REGIME?
If your income is between 5 lakhs but you have to pay the tax will come under the Existing tax regime.
According to the default tax regime, if your income is more than 7 lakhs then you have to pay the tax but if it is less than 5 lakhs then you are not required to pay the tax.
DIFFERENCE BETWEEN EXISTING TAX REGIME AND DEFAULT TAX REGIME:
As compared to the existing tax regime, the default tax regime has a lower tax rate than the existing tax regime. However, the old tax regime has more investment options.
OLD TAX REGIME:
How do you claim exemptions from your gross salary?
Exemptions under section 10:
- HRA ( House rent allowances): minimum 10% (basic + DA)
- Children's education allowance: ( Rs. 100 per child per month)
- Children's hostel allowance: ( Rs. 300 per kid per month)
- LTA( Leave travel allowance): can be claimed twice in 4 years.
- Reimbursement: meal coupon, internet/ mobile bills, car lease, etc comes under this allowance
Deductions:
- Standard deduction: up to 50000
- Under section 24: interest on a home loan up to 2 lakhs or loss from let out Property up to 2 lakhs, rent property tax up to 30% rent interest.
- Section 80C: Investments up to 1.5 lakhs, EPF, PPF, home loan principal, stamp duty & Regn, ELSS, ULIP, life insurance premium, SSY, NSC, Post office FD, 5-year FD , tuition fee, NPS section 80CCD(1A).
- section 80CCD(1B) : additional NPS up to 50000
- section 80CCD(2) : NPS, Employers contribution up to 10%/14% of basic + DA up to 7.5 lakhs per annum.
- section 80D: health insurance premium
- section 80E: interest on education loan ( no limit)
- section 80EEB: interest on EV loan 2019-23 up to 1.5 lakhs
NEW TAX REGIME:
If your income is more than 15 lakhs then you have to pay 30% of tax. Here we will get 0% tax up to 7lakhs of income.
How do you claim exemptions from your gross salary?
- Annual CTC exemptions are from EPF ( Employers contribution) and it range from 12% of basic and up to 7.5 lakhs per annum.
- Exemptions under section 10: HRA (50%/40% from basic+ DA ), children's education allowance ( Rs. 100 per kid per month).
- children's hospital allowance: Rs. 300 per kid per month.
- LTA: can be claimed twice in 4 years
- Reimbursement: meal coupon, internet/ mobile bills, car leases, etc comes under this regime.
Deductions:
- standard deduction: up to 50000
- Deductions under section 24: interest on a home loan up to 2 lakhs, loss from let out Property up to 2 lakhs, rent property tax is up to 30% rent interest.
- section 80C: investments up to 1.5 lakhs, EPF, PPF, home loan principal, stamp duty & Regn, ELSS, ULIP, life insurance premium, SSY, NSC, Post office FD, 5-year FD, tuition fee, NPS section 80CCD (1A)
- section 80CCD (1B): additional NPS up to Rs 50000
- section 80CCD (2) : NPS , Employers contribution up to 10%/14% of basic+ DA, up to 7.5 lakhs per annum.
- section 80D: health insurance premium up to 1 lakhs.
According to the old tax regime, we will get a large number of deductions but according to the new tax regime, it is not possible to show the deductions if your income is up to 15 lakhs. If you are willing to take an enhance salary then it is better to go through a new tax regime because here you can make 0% tax up to 8 lakhs.
DISCLAIMER:
These informations are given for the purpose of helping the society. There is no any kind of bad intentions behind this information. We hope all this information helps society to get rid of the tax burden and we are not responsible for the misuse of information.
CONCLUSION:
The difference between new tax regime and the old tax regime has been given here and it is useful for all the persons who pay taxes. It is better to go through all this information because it will gives information about the regime and it will help you to decide your tax idea.
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