New Tax Regime applicable from FY 2023-24: All you need to know!
By admin
To whom does Section 115BAC (New Tax Regime) apply?
The Budget 2020 introduced a new regime under section 115BAC giving individuals and HUF taxpayers an option to pay income tax at lower rates.
Tax rates under the old regime vs the new regime Sec 115BAC
| Old Regime | Old Income Tax Rates | New Regime | New Income Tax Rates |
| Upto Rs 2.5 lakh | NIL | Upto Rs 3 lakh | NIL |
| Rs 2.5 – Rs 5 lakh | 5% | Rs 3 lakh – Rs 6 lakh | 5% |
| Rs 5 – Rs 10 lakh | 20% | Rs 6 lakh – Rs 9 lakh | 10% |
| Above Rs 10 lakh | 30% | Rs 9 lakh – Rs 12 lakh | 15% |
| Rs 12 lakh – Rs 15 lakh | 20% | ||
| Above Rs 15 lakh | 30% |
The tax payable under both the new Regime Sec 115BAC and the old regimes without claiming deductions and exemptions for FY 2023-24 is as below:
| Annual income* | Tax under the old regime (Rs) | Tax under the new regime (Rs) | Tax savings under the new regime (Rs) |
| Up to Rs 7,50,000 | 65,000 | 31,200 | 33,800 |
| Up to Rs 10,00,000 | 117,000 | 62,400 | 54,600 |
| Up to Rs 12,50,000 | 195,000 | 1,04,000 | 65,000 |
| Up to Rs 15,00,000 | 273,000 | 1,56,000 | 1,17,000 |
It is assumed that the annual income is after considering the standard deduction under both old and new regimes.
Deduction and Allowances available under new and old tax regimes
| Deductions | Old Regime | New Regime |
| Standard Deduction | 50,000 | 50,000 |
| 80C(PF+LIC+Tution Fees etc) | 150,000 | Nil |
| 80CCD(1B) | 50,000 | Nil |
| 80D(Mediclaim) | Upto 100,000 | Nil |
| 80G(Donation) | Yes | Nil |
| HRA | Yes | Upto Rental Income Received |
| Rebate under Sec 87A | Upto 5 lacs | Upto 7 lacs |
Switching to New Tax Regime of FY 2023-24: Here are 5 things to consider
- Switching between Tax Regimes
Salaried Employees can switch between regimes every year. Non Salaried employees can switch every year if they do not have business income.
Taxpayers with business income can switch back to the old regime only once in a lifetime.
- Additional Compliances in the case of Business Income
Tax laws consider trading in derivatives and commodities, freelance work, and income from youtube as business income. Form 10IE is to be filed in case of business income.
- Deduction for Interest on Home Loan
No deduction for home loan interest can be claimed in the new tax regime if the property is self-occupied. In the case of a let-out property, interest can be claimed up to the value of rent received.
- Brought Forward Losses
Losses brought forward from previous years cannot be set off if switching to the new regime. Income from house property cannot be set off against income from other heads. In the case of the old regime, loss from house property can be set off against salary income.
- ITR to be filed before the due date
If you want to switch to the new tax regime, the tax return is to be filed before the due date. In case the return is filed after the due date, the new tax regime cannot be opted for.
It is advisable to duly compare the two regimes and consult your tax advisor before adopting any regime.
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