With the arrival of the new financial year in the country, the income tax season has also started. However, two tax systems are currently running in the country: the Old and New Tax Regime. Both systems have different advantages and disadvantages. Today, we will try to understand which tax regime will benefit those doing jobs.
Benefit Of Deduction Will Be Available In Old Tax Regime
The new financial year 2024-25 started on April 1. Now, job seekers must choose between the old and new tax regimes. The government has made the new tax system the default. This means you must select the old tax system; otherwise, you will be automatically put in the new one. The most significant difference between these two tax systems is regarding deductions.
In the old tax regime, you could claim many deductions under Section 80C, Section 80D, and Section 80TTA of the Income Tax Act. However, you cannot avail of this benefit in the new tax regime, which has been divided into several slabs. However, you can claim a standard deduction of up to Rs 50 thousand.
Income Up To Rs 3 Lakh Tax-Free In New Tax Regime
In the new tax regime, income up to Rs 3 lakh is tax-free. A 5 per cent tax exemption is available on income between Rs 3 to 6 lakh. You will have to pay 10 per cent tax on income between Rs 6 to 9 lakh, 15 per cent on Rs 9 to 12 lakh, 20 per cent on income above Rs 12 to 15 lakh and 20 per cent on income above Rs 15 lakh. The old tax regime has no tax exemption on income up to Rs 2.5 lakh. After this, there will be a 5 per cent rebate on income of Rs 2.5 to 5 lakh, a 20 per cent rebate of Rs 5 to 10 lakh and a 30 per cent rebate on income over Rs 10 lakh.
You Can Choose According To The Facilities Of The Job
If you work, you can choose the tax system according to the exemptions available in both these tax regimes. If you want to take advantage of deductions, the old tax system will be better for you. However, you can choose the new tax regime if you do not want to use the deduction system.
