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|
- 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.
- 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.
- 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.
- 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.