Income tax is levied on income earned by Individuals, HUFs, Partnership firms, LLPs, Corporates, etc. In case of individuals, tax is not levied at a specific rate but is levied as per slab rates.
During the budget session, our Hon’ble Finance Minister, Smt.Nirmala Sitharaman introduced a new tax structure. Now individuals and HUFs may choose between the old tax regime and the new tax regime after analyzing the benefits in both the tax structures.
Difference between old and new tax regimes:
● Under the new tax structure, the basic exemption limit is the same for all individuals, but in the old tax regime, for resident senior citizens above 60 years, the basic exemption limit is extended upto Rs.3,00,000/- and for super senior citizens above 80 years the limit of tax-free income is extended to Rs. 5,00,000/-
● Individuals with net taxable income up to Rs. 5,00,000/- can enjoy the benefit of tax rebate under Section 87A under both old and new tax regimes.
● The following deductions which are allowed under the old tax structure, will not be allowed under the new tax structure:
o Standard deduction of salary
o Leave Travel Allowance
o Conveyance Allowance
o House Rent Allowance
o Professional Tax
o Conveyance Allowance
o Interest on housing loan
o Deduction under chapter VI-A except for employers’ contribution of NPS under Section 80CCD(2).
o Additional Depreciation
● Individuals who do not have business income can make a choice every year between the old and new tax regimes. But individuals with business income can return to the old scheme after choosing the new scheme only once in their entire lifetime.
