Quick Answer: How Do I Choose Between Old And New Tax Regime?

Which deductions are allowed in new tax regime?

These include deductions under: section 80C for a maximum of Rs 1.5 lakh claimed by investing in specified financial products, section 80D for health insurance premium paid, 80TTA for deduction on savings account interest earned from a bank or post office etc..

Is standard deduction available in new tax regime?

With three more tax slabs, the new tax regime has only added to the complication. … Anyone claiming tax exemptions and deductions of more than Rs 2.5 lakh in a year will not gain from the new structure. This threshold of Rs 2.5 lakh includes the standard deduction of Rs 50,000 for which no investment is required.

Is new tax regime better?

The New Tax Regime has proposed lower income-tax rates, for income segments up to Rs 15 lakh….Income-tax rates under the new tax regime v/s the old tax regime.Income slabs (Rs)Tax Rate(Old Regime)Tax Rate(New Regime – devoid of exemptions & deductions)10-12.5 lakh30%20%12.5-15 lakh30%25%Above 15 lakh30%30%4 more rows•Feb 7, 2020

What is the benefit of new tax regime?

The new tax regime introduces lower tax rates in lieu of exemptions. It is good for people with low investments, but people who already invest a fair amount in tax-free savings schemes like PPF, NPS and claim deductions on them will suffer.

How do I choose a new tax regime?

Soni says, “If an individual who has opted for old tax regime with his/her employer for TDS on salary, plans to opt new tax regime at the time of filing ITR, then he/she can do that by filling the new form.”

How can I save tax on my new tax regime?

If you’re shifting to new regime, reconsider tax-saving productsThe case for one-time tax-saving investment.Equity-linked savings scheme (ELSS): Investment in ELSS funds, which are diversified equity funds, offers deduction up to ₹1.5 lakh under Section 80C of the Income-tax Act, 1961. … Public Provident Fund (PPF): The other investment product you can look at is PPF.More items…•

Can I change my tax regime later?

As per the laws, the employees have to choose between the old and the new tax regime and inform their employers about their choices, however, if one is not certain with the choice then he/she can certainly change his/her decision at the time of ITR filing.

What is the new tax regime 2020?

The Union Budget 2020 introduced a new personal income tax regime for individual taxpayers. … These include standard deduction of Rs 50,000, deduction under section 80C of Rs 1.50 lakh and interest on self-occupied property of Rs 2 lakh, deductions which are availed by most taxpayers.

Which is the best tax regime?

Calculations show that salaried individuals claiming a large number of exemptions (80C, 80D, interest on housing loan, HRA and LTA etc.) are likely to be better off in the existing income tax regime.