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New vs Old Tax Regime: The central government is also preparing to make the new tax system attractive. It is being told that some big announcements can be made in the upcoming full budget to make the new tax system effective. Income tax exemption can be given on investment just like the old tax system. Discussions are also going on at a high level regarding this.
According to tax experts, till now, there is no tax on income up to Rs 7.5 lakh on filing income tax returns in the new system. This also includes a standard deduction of Rs 50,000. Despite this, people are considering the old system more economical. Therefore, the government is also considering giving some additional exemptions in the new system. At present, more than 8.18 crore income tax returns are being filed in the country, out of which about 85 percent people are still filing returns under the old system.
Income up to Rs 7 lakh is tax free
It is worth noting that the government had introduced a new tax system for income tax returns three years ago, in which income up to Rs 7 lakh was exempted from tax. Later, to attract taxpayers, this limit was increased to Rs 7.5 lakh by adding a standard deduction of Rs 50,000. But even after that, people are considering the old system to be better.
Which is better, old or new tax regime?
There are currently two types of tax systems in the country – old and new. The old tax system is good for those who are paying home loan EMIs or investing in life/health insurance or elsewhere. In this, one gets the benefit of tax exemption under Section 80C of Income Tax. At the same time, the new tax system is good for those who have got a new job and who do not have any savings or liabilities. In this, there is no tax on income up to Rs 7.5 lakh.
Demand to increase investment limit in old system
Since 2014, the central government has not increased the investment limit under section 80C, while during this period people's income has increased. Due to the increase in retail inflation, the prices of food items have increased rapidly. Due to this, people's savings have also been affected due to increased expenditure on everyday items. CA Vineet Rathi says that in today's time, the limit of tax exemption on investment of Rs 1.5 lakh is nothing. In such a situation, the investment limit under 80C should be increased to at least Rs 2.5 lakh.
Income Tax Slabs of New Tax Regime
Rs 0-3 lakh 0%
Rs 3-6 lakh 5%
Rs 6-9 lakh 10%
Rs 9-12 lakh 15%
Rs 12-15 lakh 20%
Above Rs.15 lakh 30%
Income tax slabs of old tax regime
Rs 0-2.5 lakh 0%
Rs 2.5 – 5 lakh 5%
Rs 5-10 lakh 20%
Above Rs.10 lakh 30%