This yr’s Price range 2023 has made the brand new tax regime the default selection for salaried taxpayers. If you have not conveyed your choice to your employer, you’ll now be taxed below the brand new regime, in response to an ET report.
The brand new tax regime affords the next threshold for tax reduction, broader tax slabs, and lowered tax charges. Below this technique, in case your taxable earnings would not exceed Rs 7 lakh, no tax will likely be relevant. Combining this with the Rs 50,000 commonplace deduction reinstated this yr, people with a taxable earnings of as much as Rs 7.5 lakh will not incur any tax legal responsibility. Moreover, there is no such thing as a requirement for placing your cash in tax-saving devices.
Previous vs New tax regime
Nonetheless, choosing this regime means forgoing a number of deductions and exemptions out there below the previous tax construction, similar to HRA, LTA, and deductions for tax-saving investments, medical insurance coverage, and curiosity on dwelling and training loans.
Sudhir Kaushik, CEO of tax submitting portal Taxspanner.com, highlights the necessity for taxpayers to evaluate whether or not they need to go for the brand new regime or proceed with the previous one.
As soon as your employer has deducted tax as per the chosen regime, it stays unchanged for the monetary yr. For these inadvertently positioned below the brand new regime, there’s recourse throughout tax submitting. Taxpayers can swap to the previous regime whereas submitting their returns and declare deductions that have been ignored, doubtlessly resulting in a refund if extra tax was deducted.
Nonetheless, some exemptions can’t be reclaimed when submitting tax returns. For example, whereas HRA exemption is claimable, go away journey allowance exemptions can’t be asserted.
