New Tax Regime V/S The Old Tax Regime: Which is Better for You?

New Tax Regime:-

The Union budget 2023-24, presented by Finance Minister Nirmala Sitharaman on February 1, received a warm response from netizens and top industrialists alike. But it also left the citizens of India divided over a “simple prospect!” There is a famous saying everywhere that death and taxes are certain in everyone's life. However, the Union budget for this year had other plans. Many believe that the structure put forth in the Union Budget 2023-24 will bring sufficient relief for the "hard-working middle-class citizens." New Tax Regime Initially proposed in 2021, the new tax structure didn't go well with the middle-class people of the country at the time.  But this time, with the modifications in the tax structure, Finance Minister Nirmala Sitharaman believes things will change, and people will accept the new tax structure with both hands.  Nevertheless, you must have all the facts ready with you before selecting any of the schemes. To clear out your confusion, here is a simplified comparison between the two Income Tax structures. Old Tax Regime v/s New Tax Regime: You can't run away from taxes, though you can choose a way to pay them. With the government not making the new tax structure mandatory for the public, you have the option to go back to the old regime and pay the taxes. But before that, know the ins and outs of both structures. For simplicity, let us consider a guy named Bishal. Now, Bishal has to pay taxes, but he is quite unsure of which structure to opt for. So he decides to run an audit all by himself. Bishal has an annual income of Rs 12 lakh.  He decides to calculate his taxes based on the old scheme.  

Old Tax Slabs	Old Income Tax Rates
Up to Rs 2.5 lakhs	Nil
Rs 2.5 – Rs 5 lakh	5%
Rs 5 – Rs 10 lakh	20%
Above Rs 10 lakh	30%

  As per the income tax slabs in the old structure, Bishal has to pay income taxes worth Rs 1,72,500.  But Bishal can apply a standard deduction worth Rs 4 lakh in the old structure. After calculation, the net amount he has to pay is Rs 72,500. Now, he calculates the taxes for his annual income of Rs 12 lakh in the new structure.

New Tax Slabs	New Income Tax Rates
Upto Rs 3 lakh	Nil
Rs 3 lakh – Rs 6 lakh	5%
Rs 6 lakh – Rs 9 lakh	10%
Rs 9 lakh – Rs 12 lakh	15%
Rs 12 lakh – Rs 15 lakh	20%
Above Rs 15 lakh	30%

  He finds that the amount he has to pay after an exemption of Rs 50,000 (as per the new system) is Rs 82,500.  So, this calculation clearly shows that Bishal should go for the old tax structure. But here lies the crux: one size doesn't fit all! There are various factors to take into consideration before choosing a structure for yourself. Here is a list of all the important details you need to check before choosing a tax scheme:

• As you can see from the above charts, the tax slabs are significantly more in number in the new scheme than in the old structure, which is a vital point in deciding one for yourself.
• The new income tax structure exempts anyone earning up to Rs 7 lakh from paying taxes, while the old tax plans give immunity to people getting up to Rs 2.5 lakh. 
• You can have deductions by investing in PPF, LIC, and exemptions on HRA, travel allowance, etc. in the old tax structure. There are nearly 70 exemptions and deductions for taxpayers in the old tax structure. In the new tax structure, you only get a standard deduction of Rs 50,000. 
• Choosing the new tax regime gives you the flexibility to invest your money at will, as there are no predetermined restrictions, unlike the old tax structure.

Conclusion: The pointers mentioned above, along with the calculation show that there is no single compatible structure for everyone. What might work best for Bishal may not work for you. Both structures have their own set of advantages and disadvantages, so it's better to check all the parameters before choosing one for yourself.  New Tax Regime For more updates keep visiting our website www.topstoriesworld.com where we provide unbiased, true, and top stories of the world.  

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