Income tax: How to choose between old vs new tax regime

The new tax structure was introduced by the government in the budget of 2020 with the aim to reduce tax deductions and exemptions. The taxpayers now have two tax regimes – new and old – to choose from. Finance minister Nirmala Sitharaman had said that if taxpayers choose the new tax structure, then they will not be able to claim the tax deduction and claims as they did earlier, but the tax rate in their tax slab will be reduced. In the old tax regime, the tax deductions and exemptions will be the same as they were earlier but the tax rate in the tax slab will not be reduced.

It is important to assess the income and its relationship with the income tax. The basic exemption limit of income tax is for an income of Rs 2.5 lakh, which means no tax is cut if you are earning up to Rs 2.5 lakh. It is important to know the tax deducted on various income slabs as per the new regime.

Tax slabs in the old regime

0- Rs 2.5 lakh- Nil

Rs 2.5 lakh- Rs 5 lakh- 5%

Rs 5- Rs 10 lakh- 20 %

Rs 10 lakh and more- 30%

New Regime

0- Rs 2.5 lakh- Nil

Rs 2.5 lakh- Rs 5 lakh- 5%

Rs 5- Rs 7.5 lakh- 10%

Rs 7.5 lakh- Rs 10 lakh- 15%

Rs 10- Rs 12.5 lakh- 20%

Rs 12.5 lakh- Rs 15 lakh- 25%

Rs 15 lakh and more- 30%

Watch the full video to know more..