Income Tax: Is the new tax slab beneficial? How easy is the tax in the old slab, understand the answers to such questions

 


Income tax slabs: Before opting for a new tax slab, things related to it must be understood. The new tax regime was introduced in the budget of 1 February 2020. But, since then there is confusion in the minds of many people.

Income tax slabs: Presenting the budget on 1 February 2020, Finance Minister Nirmala Sitharaman introduced a new tax slab for taxpayers. In the new tax slab, some additional exemptions were given to the taxpayers. The new tax slab has come into effect from 1st April 2020. Now you can decide whether to choose this slab or not, only when its advantages and disadvantages are known. Please understand before filling the investment declaration in the month of January.

TAXPAYERS MUST UNDERSTAND THESE THINGS

Before opting for the new tax slab, things related to it must be understood. Tax expert Sunil Garg Tax has explained in detail about this new slab and its benefits. How taxpayers can take maximum benefit in the new tax slab, it depends on the slab they choose. The tax slab can be selected in different ways for different benefits. First understand what is in the new slab.

What is the new tax slab?

Income (Rs.)Tax (percentage)
2.5 lakh0
2.5-5 lakhs5
5.-7.5 lakh10
7.5-10 lakh15
10-12.5 lakhs20
12.5-15 lakhs25
over 1530

WHICH INSTRUMENTS GET TAX EXEMPTION IN THE OLD SLAB?

  1. Housing loan principal and interest
  2. Investing in PPF and EPF
  3. Interest Income on Deposits (80TTA)
  4. FD means fixed deposit
  5. children's tuition fees
  6. Standard Deduction of Employers (Rs 50,000)
  7. LTA means Leave Travel Allowance
  8. HRA means house rent allowance
  9. Medical and insurance expenses
  10. Tax exemption on treatment of 80DD Divyang
  11. Tax exemption on expenses of Divyang in 80U
  12. Tax exemption on 80E education loan
  13. Section 16-Entertainment Allowance
  14. 80GG House Rent Discount
  15. 80G-donation (discount on donation)
  16. 80EEB-Tax Exemption on Electric Vehicles

WHERE WILL YOU GET RELIEF IN THE NEW TAX SLAB?

  1. Standard deduction on rent.
  2. Income from farming.
  3. Interest earned on PPF.
  4. Maturity amount of insurance.
  5. Amount received from insurance on death.
  6. Compensation received on retrenchment.
  7. Leave encashment on retirement.
  8. VRS - Voluntary Retirement.
  9. Interest and maturity amount received on Sukanya Samriddhi account.

CAN SWITCH TAX SLABS

The special thing is that the taxpayers can go from the old tax slab to the new slab and they can come back from the new slab to the old slab. However, this exemption is only for certain categories of taxpayers. Employers can come back by going to the new slab. Salaried employees can switch tax slabs in every financial year. Those who have income from salary, rent or other sources, they can change the tax slab every time. If you have income from business then you can shift only once. Businessmen once switched cannot come back. 

WHERE DO SENIOR CITIZENS BENEFIT?

If senior citizens are taking special discounts, then the existing slab is correct. If you are taking a discount of 50 thousand on pension income, then it is okay to stay in the current slab. If you are taking medical insurance, medical expenses exemption, then do not shift. If you have taken a discount of 50,000 on 80TTB, then do not switch.

FOR PROFESSIONAL

If you are a doctor, lawyer, engineer or chartered accountant then you can come under the new scheme. The special thing is that you can choose between new or old scheme every year.

TDS WILL BE DEDUCTED FROM NEW OR OLD SYSTEM

The employee will have to tell about the scheme at the beginning of the year.
Employer will calculate TDS according to the tax scheme.
No form has been notified for the new scheme yet.
Declaration of the chosen scheme has to be given along with ITR.

WHAT TO DO WITH THE EXISTING DISCOUNT?

If you choose a new scheme, do not stop the existing investment.
- Continue LIC premium, PPF etc.
Only tax concession will not be available in the new tax scheme.
Insurance is necessary for the protection of life.
Rest of the investment will come in handy for other goals.
If there is a housing loan, then the existing scheme is effective.
Up to 2 lakh discount on housing loan.
Take housing loan waiver for income up to 10 lakhs.

NPS, PF WITHDRAWAL TO BE TAXED

No tax on New Pension Scheme withdrawal.
No change in tax rules on NPS withdrawal.
Old tax rules on PF withdrawal too.
No concession in the new tax system on NPS, PF investments.

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