Budget 2024: New vs. Old Tax Regime – Which Offers Greater Benefits for Your Income?
Budget 2024 offers a choice between the new, simplified tax regime with higher deductions or the old regime, which favors high deductions and higher incomes.
Budget 2024, New Tax Regime, Old Tax Regime, Income Tax, Tax Benefits, Standard Deduction, High Income Tax, Tax Savings, Finance Minister, Nirmala Sitharaman
Union Finance Minister Nirmala Sitharaman recently presented the Budget 2024-25 containing a change in the tax structure to be effective in your planning. The new tax regime post-5th August offers better exemption and relief with more straightforward rates of tax deductions and new tax slabs. This is reform is intended to be advantageous for many entities as it will reduce the burden of engaging in the filing of taxes.
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In the new tax regime, the standard deduction has been raised from 50,000 rupees to 75,000 rupees, and the tax slabs have been aligned to give more relief to the low and middle income taxpayers. For voters/taxpayers making up to ₹7. Its benefit as far as those earning upto 75 lakh is concerned would be that the existing system could virtually wipe off the taxes, and thus it would be a handy proposition at this point of time for the persons coming under this bracket. This is especially helpful for the middle class and employees receiving a fixed monthly salary for they are more likely to have an annual income not exceeding ₹7 lakh.
Special Interview with Finance Minister Nirmala Sitharaman on Union Budget 2024-25 on DD National's YouTube channel.
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On the other hand, the sustained structure of the old system continues to favor the high earners as well as those with heavy deductions. The limit to avail tax benefits as per the old regime will be beneficial to those, who expected big deductions like ₹2lakhs on home loan interest portion, or a good HRA exemption among others. For instance, someone whose income is ₹11 lakh will get a tax benefit of deductions more than ₹3,93,750 under the old regime; he will be paying less taxes than what he would now under the new tax regime. This also holds for those with an income of approximately ₹60 lakh since it is possible to adjust deductions legally and optimally in order to make small changes to the tax amount.
For income earners earning more than ₹10 lakh, tax preferences are way better under the previous taxation system because there are various exemptions allowed under the new tax system. On the other hand those earning around₹6crore may find the new regime beneficial because the TDS on that slab attracts a lower surcharge and this results in saving tax.
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Last but not the least, the employee or the assessee who has high deductions and high income might prefer to go with the old regime tax while an employee earning up to ₹ 7 lakh or above ₹ 5- 6 crores might find the new simplified tax regime better for him or her.
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