Tax saving in new tax regime 2023-24 vs old tax regime post Budget announcements
Budget 2023 has revised the income tax slabs in the new income tax regime for the financial year 2023-24. Here's a comparison of tax saving at different income levels under the new and old income tax regimes for salaried individuals.The following calculations are based on the assumptions:
a) Section 80C benefit of Rs 1.5 lakh was taken in the old tax regime.
b) Standard deduction benefit of Rs 50,000 is taken in the old tax regime and revised new tax regime.
Gross salary income level (In Rs)Tax payable in Old Regime (in Rs)Tax payable in New Regime (In Rs)Tax payable in Revised New Regime (2023) (In Rs)Tax saving - Old vs Revised New (In Rs)Tax saving - New vs Revised New (2023) (In Rs) 5,00,000 - - - - - 6,00,000 - 23,400 - - 23,400 7,50,000 23,400 39,000 - 23,400 39,000 10,00,000 75,400 78,000 54,600 20,800 23,400 12,50,000 1,32,600 1,30,000 93,600 39,000 36,400 15,00,000 2,10,600 1,95,000 1,45,600 65,000 49,400 25,00,000 5,22,600 5,07,000 4,52,400 70,200 54,600 50,00,000 13,02,600 12,87,000 12,32,400 70,200 54,600 1,00,00,000 31,48,860 31,31,700 30,71,640 77,220 60,060 Source: EY India
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India unveils income tax bonanza a year before ...123456789101112As per the table above, for a salaried individual having taxable income of Rs 5 lakh there will be no tax savings or additional tax outgo.
The revised new income tax regime offers rebate under section 87A for taxable income upto Rs 7 lakh. Thus, individuals with income not exceeding Rs 7 lakh and opting for revised new income tax regime will benefit by not having to pay taxes. Further, they will not be required to make any investments to claim tax deductions such as under section 80C etc. of the Income-tax Act to bring their tax outgo to zero as would be required in the old tax regime. As shown in the table above, an individual having taxable income of Rs 6 lakh will have tax savings of Rs 23,400 under the revised new tax regime.
The revised new tax regime has proposed to allow standard deduction of Rs 50,000 to salaried individuals. Hence, an individual having gross income of Rs 7.5 lakh can claim standard deduction and bring the taxable income to Rs 7 lakh in order to pay nil tax under the revised new tax regime. They will save tax of Rs 23,400 vis-a-vis old tax regime and Rs 39,000 vis-a-vis new tax regime.
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This story originally appeared on: India Times - Author:Faqs of Insurances
