Finance Minister Nirmala Sitharaman gave great relief to taxpayers on 1 February. He announced to pay tax on income up to Rs 12 lakh annually in the union budget. People doing jobs will not have to pay tax on income up to Rs 12.75 lakh annually. The reason for this is standard deduction. People who do this benefit from this.
After the announcement in the budget of Finance Minister Nirmala Sitharaman, the new regimen of income tax has become attractive. People with up to 12 lakhs in the new regimen will not have to pay tax. The question is that if someone invests maximum in taxpayer tax savings instruments, will the old scheme be beneficial for him? Tax experts say that if a person’s income is Rs 20 lakh, then even after investing in tax savings instruments, he will have to pay more tax in Old Regimm.
If a person has an annual income of Rs 20 lakh and he claims a deduction of Rs 5.25 lakh, then his tax in Old Regimm will be Rs 2.4 lakh, while the new regimen will make Rs 2 lakh. However, Old Regimm will be beneficial for people whose income is between 13.75 lakh to 15.75 lakh rupees. There are many types of deeds permits in Old Reijim. Most notes are not available in the new regimen.
The government started the Old Rizim of Income Tax in 2020. The government introduced this rezim for such taxpayers, which do not claim deductions. Tax rates are low in the new regimen, but most of the deductions do not benefit. But, this is quite easy. Tax calculation can be easily done in this.
In Old Regim, deduction is available under sections 80C, 80D and 24B of the Income Tax Act. About a dozen investment options come under 80C. Deduction is also available under the same section on tuition fees up to two children. Under this section, deduction can be claimed up to Rs 1.5 lakh. Diction is available on health policy under section 80D. A person from the age of 60 years can claim deduction of Rs 25,000. A person above 60 years of age can claim a deduction of Rs 50,000. Under section 24B, deduction is available on home loan interest. Its limit is 2 lakh rupees.
Deduction is also available on the principal of the home loan. This deduction is available under section 80C under a limit of 1.5 lakh lakhs. Apart from this, there is an exgamption on HRA in Old Regim. This reduces the taxpayer’s taxable income significantly.