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In India, the Income Tax operates according to a structured system consisting of tax slabs. The income of taxpayers is divided into specific ranges -- each with different rates. This has been done to ensure people with high incomes contribute proportionately more taxes.
To plan their finances effectively, taxpayers need to have a basic understanding of the Income Tax slabs.
The salaried employees in India are offered two tax regimes -- the old and the new one.
Old Tax Regime
New Tax Regime
Differences between old and new tax regimes?
For taxpayers in India, the decision to opt for the new or old tax regimes depends on individual circumstances, especially the availability and extent of deductions.
According to the Income Tax Department, "The option to choose between two regimes may vary from person to person. It is advisable to do a comparative evaluation and analysis under both regimes and then choose as per requirement. Taxpayers can broadly estimate and compare tax liability under the new and the old tax regime using the Income and Tax Calculator on the Income Tax Portal."
While the tax slabs and rates are different in both tax regimes, the old one offers several deductions and exemptions. The new tax regime provides lower rates of taxes, but at the same time permits limited deductions and exemptions.
People should always take into consideration the available exemptions and deductions before evaluating the two tax regimes. You can determine the net taxable income after making these deductions from your total income.
An in-depth analysis of the old regime shows how it encourages savings habits, besides offering advantages as senior citizen benefits under Section 80TTB, among some of its other positive aspects.
The new tax regime tries to simplify the tax filing process, especially benefitting individuals falling under low-income slabs.
It is often advised to take the help of tax experts before opting for one of the two options available. It is crucial to inform the employer of your chosen tax regime to make sure that the correct tax is deducted at source -- TDS -- from your salary.
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To plan their finances effectively, taxpayers need to have a basic understanding of the Income Tax slabs.
The salaried employees in India are offered two tax regimes -- the old and the new one.
Old Tax Regime
| Income Tax Slabs (₹) | Income Tax Rates (%) |
| From 0 to 2,50,000 | Nil |
| From 2,50,001 to 5,00,000 | 5 |
| From 5,00,001 to 10,00,000 | 20 |
| From 10,00,001 and above | 30 |
New Tax Regime
| Income Tax Slabs (₹) | Income Tax Rates (%) |
| From 0 to 3,00,000 | Nil |
| From 3,00,001 to 7,00,000 | 5 |
| From 7,00,001 to 10,00,000 | 10 |
| From 10,00,001 to 12,00,000 | 15 |
| From 12,00,001 to 15,00,000 | 20 |
| From 15,00,001 and above | 30 |
Differences between old and new tax regimes?
For taxpayers in India, the decision to opt for the new or old tax regimes depends on individual circumstances, especially the availability and extent of deductions.
According to the Income Tax Department, "The option to choose between two regimes may vary from person to person. It is advisable to do a comparative evaluation and analysis under both regimes and then choose as per requirement. Taxpayers can broadly estimate and compare tax liability under the new and the old tax regime using the Income and Tax Calculator on the Income Tax Portal."
While the tax slabs and rates are different in both tax regimes, the old one offers several deductions and exemptions. The new tax regime provides lower rates of taxes, but at the same time permits limited deductions and exemptions.
People should always take into consideration the available exemptions and deductions before evaluating the two tax regimes. You can determine the net taxable income after making these deductions from your total income.
An in-depth analysis of the old regime shows how it encourages savings habits, besides offering advantages as senior citizen benefits under Section 80TTB, among some of its other positive aspects.
The new tax regime tries to simplify the tax filing process, especially benefitting individuals falling under low-income slabs.
It is often advised to take the help of tax experts before opting for one of the two options available. It is crucial to inform the employer of your chosen tax regime to make sure that the correct tax is deducted at source -- TDS -- from your salary.
(Edited by : Sudarsanan Mani)
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