Old v/s New Tax Regime: Which one to choose?

On February 1, 2020, the Finance Minister announced major changes in the tax regime with respect to tax slab rates and introducing a new tax regime.

The new regime comes with reduced income tax slab rates and the removal of rebates and exemptions.

Individuals/Hindu Undivided Family have to option to choose between the old tax regime and the new tax regime in the upcoming Assessment Year. The major difference between both of these tax regimes is income tax slab rates as well as the ability to claim exemptions and deductions.

Old vs New Tax Regime

Under the New Tax Regime, new tax slabs have been introduced with existing rates which are slashed on income up to INR 15 Lakh. The Finance Minister announced that under the new tax regime, the basic tax exemption limit will remain the same for all assesses including the senior citizens.

Under the new tax regime with respect to deductions and exemptions, there have been major removals. This has made tax compliance less tedious.

There cannot be a straight answer to the question that which tax regime is better to opt for. It depends on each taxpayer’s situation and financial position.

Looking at the reduction in tax rates new system looks better but due to the non-availability of various deductions or exemptions, it is advisable to do comparative evaluation and analysis under both the regimes before you opt for the new regime or decide to continue with the old one.

Still wondering which regime to choose? Don’t worry we have got you covered!