Tax Planning And Financial Planning Should Go Hand In Hand
Tax planning goes hand in hand through all the stages of financial planning as it ensures that funds are being appropriated in accordance with your goals as well as tax saving opportunities.
Old Tax Regime Vs New Tax Regime
Taxpayers need to evaluate
their financial situation and future
goals to determine which regime is
more beneficial for them.
Those with substantial deductions and
exemptions may find the old regime
On the other hand, individuals seeking
simplicity and lower tax rates might
opt for the new regime.
Comparison Between Old Tax Regime
And New Tax Regime
Under the Old tax regime, taxpayers can avail various deductions and exemptions such as HRA (House Rent Allowance), standard deduction, deductions under sections 80C. 80D, etc.
The old tax regime consists of multiple tax slabs with varying tax rates, allowing taxpayers to reduce their tax liability based on their income levels.
Due to the multitude of deductions and exemptions, the old tax regime can be complex to understand and compute, requiring careful tax planning.
Tax-saving investments like PPF (Public Provident Fund), NSC (National Savings Certificate), and ELSS (Equity Linked Savings Scheme) can be used to reduce taxable income.
Taxpayers have more flexibility to structure their investments to optimize tax benefits.
The new tax regime offers reduced tax rates without many deductions and exemptions. Taxpayers are subject to lower tax rates based on their income levels.
The new regime is designed to simplify the tax calculation process by eliminating the need to keep track of various exemptions and deductions.
While certain exemptions are removed, the new regime provides a standard deduction for salaried individuals to offset some expenses.
Tax-saving investments like Public Provident Fund, National Savings Certificate, and Equity Linked Savings Scheme do not offer additional tax benefits under the new regime.
Taxpayers have limited flexibility in reducing their tax liability beyond the flat deductions provided.
Upto Rs. 3 Lakhs
Rs. 3 Lakhs- Rs. 6 Lakhs
Rs. 6 Lakhs- Rs. 9 Lakhs
Rs. 9 Lakhs- Rs. 12 Lakhs
Rs. 12 Lakhs- Rs. 15 Lakhs
Rs. 15 Lakhs & Above
There are over 70 exemptions and
deductions that can help you reduce
your taxable income.
If you can avail the deductions
of Rs. 3.75 lakhs or more, Old Regime
is always a better choice for you.
Under the new regime, there is
no income tax to be paid for annual
income up to Rs 7 lakhs.