Union Budget-2023: Whether the old Tax Regime is still better?




Loading

Union Budget-2023: Whether the old Tax Regime is still better?  

 

Though there are numerous benefits & motivation for the taxpayers to opt for the new tax regime, still the old regime could be better in some cases.  Here is a chart which summarizes the minimum amount of exemption / deduction above which the taxpayers may think of remaining in the old tax regime.

 TAX LIABILITY UNDER NEW TAX REGIME AS PER FINANCE BILL – 2023    
   
 Gross Total Income   Tax  Rebate  Cess  Total Tax  Tax under the Old Regime                       ….  MINIMUM AMOUNT OF Exemption/ Deduction after which the old Regime will be better
 I  IV  V  VI  VII  VIII  VIII
        500,000        10,000        10,000                 –                   –                   –                        –  
        600,000        15,000        15,000                 –                   –          33,800          100,000
        650,000        20,000        20,000                 –                   –          44,200          150,000
        700,000        25,000        25,000                 –                   –          54,600          200,000
        800,000        35,000                 –            1,400        36,400        75,400          187,500
        900,000        45,000                 –            1,800        46,800        96,200          237,505
     1,000,000        60,000                 –            2,400        62,400      117,000          262,504
     1,100,000        75,000                 –            3,000        78,000      148,200          287,503
     1,200,000        90,000                 –            3,600        93,600      179,400          312,502
     1,300,000      110,000                 –            4,400      114,400      210,600          312,500
     1,400,000      130,000                 –            5,200      135,200      241,800          341,666
     1,500,000      150,000                 –            6,000      156,000      273,000          375,000
     1,600,000      180,000                 –            7,200      187,200      304,200          375,000
     1,700,000      210,000                 –            8,400      218,400      335,400          375,000
     1,800,000      240,000                 –            9,600      249,600      366,600          375,000
     1,900,000      270,000                 –          10,800      280,800      397,800          375,000
     2,000,000      300,000                 –          12,000      312,000      429,000          375,000
     2,100,000      330,000                 –          13,200      343,200      460,200          375,000

Conclusion:

  1. One needs to calculate the total income tax under the old as well as new regime individually. So long as the benefit of exemptions and deductions is more than the impact of higher tax rate under the old tax regime, it would be advisable not to opt for the new tax regime but continue with the old tax regime. It makes sense to evaluate before taking a final call.

  1. Taxpayers with income mentioned in column I above may decide to take the shelter of the old tax regime if the amount of exemption and deduction exceeds the figures mentioned in column VII above.

  1. As a general rule, if the amount of deduction and exemption exceeds Rs. 3.75 Lakh for any categories of the taxpayers with income not exceeding Rs. 5 Cr., the old regime may be more beneficial.

  1. Above working has been carried out ignoring the benefit of standard deduction to the salaried taxpayers which is available under both the regime. Individual taxpayers with income exceeding Rs. 5 Cr will be benefitted by the reduction in the rate of surcharge and may prefer the new tax regime only.

In case where the income of the taxpayer is below Rs. 5 Cr and the person has availed the housing loan whereby payment of interest is Rs. 2 Lakh, deduction U/s 80C is of Rs. 1.50 Lakh and NPS / Mediclaim investment of the full amount is there, the taxpayers can prefer the old tax regime and not the new tax regime.




Menu