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Saturday, June 22, 2024

Confused between new & old tax regimes? Read this

Here is a thread to explain what is best suitable for you between old regime & new regime.

Assumptions:

1. You have a salary income and not business income.

2. You are an individual.

3. I have taken standard deduction at 50k while comparing both

4. This is not formal advice. Consult a CA (for formal advice)

For those who have income up to 5 lacs:

Old Regime: No Tax

New Regime: No Tax

I think these people are happiest but poor in terms of money. Kidding! Both regimes are same for people in this category. Now next category.

People with income up to 6 lacs

Old: 23,400

New: Nil

These people will have to invest 50k to have nil tax under old regime. New regime – chill, tax is zero. Now the next category.

People with income up to 7 lacs

Old: 44,200

New: Nil

These people will have to invest about 1,50,000 to have zero tax under old regime. People who opt New regime can chill, their tax is zero. Now onto next category.

People with income up to 9 lacs

Old: 85,800

New: 41,600

People opting for old regime at this income level will have to invest about 2,13,000 to have same tax of 41.6k equal to new regime. Obviously, higher than this investment will be beneficial for you and you choose old regime.

People with income up to 12 lacs

Old:1,63,800

New: 85,800

People opting for old regime will have to invest about 3 lacs to have same tax of 85.8k equal to new regime. Obviously, if you invest more than this then old regime is better for you

People with income up to 15 lacs

Old: 2,57,400

New: 1,45,600

People opting for old regime will have to invest about 3.6 lacs to have same tax of 1.4 lacs equal to new regime. Obviously if you invest more than this, old regime is better for you.

People with income up to 15.5 lacs

Old: 2,73,000

New: 1,56,000

People opting for old regime will have to invest about 3.8 lacs to have same tax of 1.56 lacs equal to new regime. All in all, if you have any amounts to claim as deduction or investments over and above the break even I have stated, then surely old regime is more beneficial for you. If not, then quietly opt for the new regime and save a bomb.

Secondly: obtain proper advice and then decide. There are a lot other factors to consider as well. Hope this basic guide cleared your queries. Cheers.

(This article has been compiled from the tweet thread posted by @muglikar_ with minor edits to improve readability)

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