New Tax Regime : Benefits for Different Income Levels

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Are you still confused about which income tax regime to choose?
In this article let us know about the new regime, that how it simplifies tax filing and offer lower tax rates and also how different income levels may get benefit from the new tax regime?

new tax regime

Introduction of the New Tax Regime

New tax regime under section 115BAC of the Income Tax Act was introduced in the 2020 budget by Finance Minister Nirmala Sitharaman.

Tax Slabs in the New Regime

  • No tax on income upto ₹3 lakh.
  • 5% tax on income from ₹3 lakh to ₹6 lakh.
  • 10% tax on income from ₹6 lakh to ₹9 lakh.
  • 15% tax on income from ₹9 lakh to ₹12 lakh.
  • 20% tax on income from ₹12 lakh to ₹15 lakh.
  • 30% tax on income above ₹15 lakh.

Benefits of the New Tax Regime

With fewer deductions and exemptions , the tax filing process is more straightforward and less time-consuming.
This is advantageous for those who have not invested in savings schemes like PPF, NSC, or life insurance policies, not owning a house, or not claiming House Rent Allowance.

Exemption Thresholds under Section 87A

  • New Tax Regime: Complete exemption for income under ₹7 lakh.
  • Old Tax Regime: Exemption for income under ₹5 lakh.

How Much Can You Save Under the New Income Tax Regime?

new tax regime

For Annual Income of ₹7.5 Lakh

  • Old Regime: ₹49,036 tax payable.
  • New Regime: No tax payable due to Section 87A.
  • Savings: ₹49,036

For Annual Income of ₹10 Lakh

  • Old Regime: ₹99,320 tax payable.
  • New Regime: ₹54,600 tax payable.
  • Savings: ₹44,720.

For Annual Income of ₹12.5 Lakh

  • Old Regime: ₹1,65,688 tax payable.
  • New Regime: ₹93,600 tax payable.
  • Savings: ₹72,088

For Annual Income of ₹15 Lakh

  • Old Regime: ₹2,40,942 tax payable.
  • New Regime: ₹1,45,600 tax payable.
  • Savings: ₹95,342

For Annual Income of ₹20 Lakh

  • Old Regime: ₹3,91,560 tax payable.
  • New Regime: ₹2,96,400 tax payable.
  • Savings: ₹95,160.

How to save tax for salary above 10 lakhs? Click Here
How to Save Tax if Salary is Above 5 Lakhs? Click Here

FAQs

Which is better, a new or old regime?

New Tax Regime is better if you have not invested in any savings schemes.

Can we go back from new regime to old regime?

Individuals with income from a business or profession can switch tax regimes only once in future. If you choose the new tax regime by filing Form 10IE, you cannot switch back to the old regime in subsequent years.

Who opts for new tax regime?

A salaried taxpayer can switch between the new and old tax regimes each year. Non-salaried taxpayer must choose the new regime when filing their tax return and does not need to declare their choice during the year.

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