ITR Filling: Under the new system in the budget, it was proposed to allow tax exemption on income up to Rs 7 lakh annually, while income tax exemption up to Rs 5 lakh is available under the old tax system. Both the old and the new systems have their advantages and disadvantages.
Income Tax Filling: The process of filing Income Tax Return (ITR) is going to start soon. At the same time, income tax returns can be filed under two tax systems in the country. This includes the new tax system and the old tax system.
At the same time, to encourage the adoption of the new tax system, the government announced several changes in the Union Budget for 2023-24. Under the new system in the budget, it was proposed to allow tax exemption on income up to Rs 7 lakh annually, while income tax exemption up to Rs 5 lakh is available under the old tax system.
Both the old and the new systems have their advantages and disadvantages. In such a situation, before paying tax, it should be known that what is the difference between old and new tax regime. Let’s know about it…
New tax regime
To promote the new income tax system prominently and to make the middle class more happy, the government has announced important changes in the new income tax system. In the new tax regime, the basic exemption limit has been increased to Rs 3 lakh, which was earlier Rs 2.5 lakh. Apart from this, there will be tax exemption on income up to Rs 7 lakh, which was earlier Rs 5 lakh under section 87A.
Old tax system
At the same time, it should be noted that in the old tax regime, for claiming exemption for various allowances of salary (like HRA, LTA, etc.) and specified investments like Public Provident Fund (PPF), NPS, home loan, tuition fee/ There is also enough room for expenditure. There is an option to get exemption on investments in the old tax regime.
Income Tax
On the other hand, the new tax regime has the benefit of standard deduction and full exemption is provided to individuals earning up to Rs 7 lakh annually. Therefore, individuals with annual income above Rs 7 lakh will have to choose judiciously between the new and old tax regimes. As in the old tax regime, deductions and no tax on income up to Rs 5 lakh.
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