New vs Old Tax Regime: The central government is also gearing up to make the new tax regime attractive. It is being said that some big announcements may be made in the next full budget to make the new tax regime effective. As in the old tax system, the investment can be exempted from income tax. This is also being discussed at the highest level.
According to tax experts, the new system so far does not attract any tax on income up to Rs 7.5 lakh for filing income tax returns. This also includes a standard deduction of 50 thousand rupees. Despite this, people are finding the old system more economical. Therefore, the government is also considering some additional concessions in the new system. Currently, more than 8.18 crore income tax returns are being filed in the country, of which about 85 percent are still filing returns using the old system.
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Income tax free up to Rs 7 lakh
It may be noted that the government introduced a new tax system for income tax returns three years ago, in which income up to Rs 7 lakh was tax-free. Later, to attract taxpayers, this limit was raised to Rs 7.5 lakh by adding a standard deduction of Rs 50 thousand. But even then people are considering the old system as better.
Which old or new tax system is better
At present there are two types of tax system in the country – old and new. The old tax regime is suitable for those who are paying home loan EMIs. or investing in life/health insurance or elsewhere. This gets the benefit of tax exemption under Income Tax Section 80C. At the same time, the new tax regime is suitable for people who have got a new job and have no savings or liabilities. In this no tax is levied upto Rs 7.5 lakh income.
Demand to increase investment limit in old system
The central government has not increased the investment limit under Section 80C since 2014, even though people’s incomes have increased during this period. The rise in retail inflation has led to a rapid increase in the prices of food items. Because of this, as the cost of daily use items has increased, the savings of the people have also been affected. CA Vineet Rathi says that today there is no limit on tax exemption on investment of Rs 1.5 lakh. In such a situation, the investment limit under 80C should be raised to at least Rs 2.5 lakh.
Income Tax Slab of New Tax Regime
Rs 0-3 lakh 0%
Rs. 3-6 lakhs 5%
Rs 6-9 lakh 10%
Rs 9-12 lakhs 15%
Rs 12-15 lakh 20%
30% above 15 lakhs
Income tax slab of old tax regime
Rs 0-2.5 lakh 0%
2.5- Rs 5 lakh 5%
Rs 5-10 lakh 20%
30% above 10 lakhs