Choose Right Tax Regime for FY 2023-24

ARE YOU CONFUSED ABOUT WHICH TAX REGIME TO CHOOSE?

• Old Regime with Deductions and Exemptions, or
• New Regime with Lower Slab Rates, but Fewer Exemptions

Employees are required to notify their preferred tax regime to their employers at the start of the financial year.

WHY DO YOU HAVE TO OPT FOR A TAX REGIME?

• CBDT (via circular no 04/2023) made it COMPULSORY for Employers to seek information from their Employees on which regime they wish to opt for.
• The Employer shall deduct TDS accordingly.

If you FAIL to choose between the New and Old Tax Regime, the Employer will take the New Tax Regime as DEFAULT and deduct TDS under it.

However, do note that the Income-tax regime chosen for the purpose of TDS on Salary has no impact on filing an Income tax return by the assessee. You will have the option to Change it at the time of Filing your ITR

DEDUCTIONS AND EXEMPTIONS AVAILABLE

*Note: Standard deduction of Rs 50,000 can claim in both regime

SOME TIPS ON HOW TO CHOOSE THE RIGHT TAX REGIME FOR YOU

• If you have income upto Rs 7 lakh, then the New Tax Regime is better
• If you have No Tax savings and Deductions to avail, then consider going for the New Tax Regime
• If you have just 80C Deduction of Rs 1.5 lakh, then New Tax Regime might be better
• If you can avail 80C Deduction and also have a Home Loan, then Old Tax Regime be better for you.
• If you have an HRA Deduction to claim, then Old Tax Regime might be better for you.

OPTING FOR OLD TAX REGIME IS WISER BECAUSE

It makes sense to opt for the old tax regime for TDS on salary because the employer will provide you with the break-up of tax exemptions and deductions in Form 16. Further, if you switch to a new tax regime at the time of filing ITR, then calculating taxable income will be comparatively easier. In case you are unable to make specific investments during the financial year, then the new tax regime will help you in lowering tax outgo.

Disclaimer: This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement