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Income Tax: How much tax will a taxpayer have to pay on last year’s income, check the list here

Remember, even if any relief is provided in the Union Budget 2024 to be presented on July 23, ITR for the financial year 2023-24, i.e., assessment year 2024-25, will have to be filed on the basis of last year’s rules, slabs, and rates.

The date for filing Income Tax Return, i.e. ITR, is very close, and the ITR for the financial year 2023-24 will have to be filed before July 31 to avoid late fees and penalty. Now the biggest dilemma or confusion that the common taxpayer faces is whether any relief will be given in the full budget coming on July 23 or not. So the answer to this is that even if any relief is found in the interim budget presented in February before the general elections or in the General Budget 2024 to be presented on July 23, then ITR for the financial year 2023-24, i.e. Assessment Year 2024-25, will have to be filed on the basis of last year’s rules, slabs and rates.

Changes were made in the income tax regime last year

Now let us remind you what changes were made by Union Finance Minister Nirmala Sitharaman in the rules related to income tax in the general budget presented last year, i.e. in the year 2023. The Finance Minister had declared the new tax regime, i.e. New Tax Regime, announced for the first time in the year 2020, as default, but did not abolish the old tax regime, i.e. Old Tax Regime. So this means that taxpayers can still choose the old tax regime as per their wish. This means that apart from life insurance, PPF, Sukanya Samriddhi Account (SSA), children’s school fees etc., those wishing to avail exemptions like interest paid on home loan taken from the bank to build their own house, amount deposited in NPS, i.e. National Pension System or house rent allowance, i.e. HRA Exemption, will be able to deposit income tax by calculating tax at the old, unchanged rates in the Old Tax Regime.

Who will benefit how much in which tax regime…?

So, today let us tell you who will benefit how much from the changes made in the New Tax Regime of Income Tax last year, or who will have to pay more tax in which regime. In the two charts given below, we have calculated the tax payable in the old tax system and the new tax system, and from the table you can also see how much income tax you will have to pay in which regime.

In these two charts, we have included examples of four salaried people whose annual income is ₹7,00,000, ₹10,00,000, ₹12,00,000 and ₹15,00,000 respectively. All four of them also get exemption under Section 80C of the Income Tax Act, exemption on House Rent Allowance (HRA Exemption) and exemption under NPS, so let’s see who will have to pay how much tax in which regime.

Tax liability in the old tax regime

In the first table of the old tax regime, you can see that all four taxpayers have been given the benefit of standard deduction, all four have saved a maximum of ₹1,50,000 under Section 80C of the Income Tax Act, all four taxpayers have also deposited ₹50,000 in NPS, and have claimed HRA exemption or exemption on interest paid on home loan.

In the same table, the taxable income of the first taxpayer with an annual income of ₹7,00,000 is ₹3,70,000 after getting all the exemptions, on which his tax liability, despite being ₹6,240, became zero due to the exemption available under Section 87A of the Income Tax Act. The taxable income of the second taxpayer earning ₹10,00,000 is reduced to ₹6,00,000 after deductions and exemptions of ₹4,00,000, on which he will have to pay income tax of ₹33,800. Similarly, after calculating deductions and exemptions, taxpayers earning ₹12,00,000 and ₹15,00,000 per annum under the Old Tax Regime will also have to pay ₹75,400 and ₹1,06,600 as income tax respectively.

Tax liability in the new tax regime

In the second table, i.e. the new tax regime or New Tax Regime, the income tax of these four taxpayers has also been calculated. Under the changes announced last year (on February 1, 2023), this time all four will be able to get the benefit of standard deduction, and apart from this, due to changes in slabs and rates and increase in the exemption limit of section 87A of the Income Tax Act, a taxpayer with an annual income of ₹ 7,00,000 will not have to pay any tax this time also. A taxpayer earning ₹ 10,00,000 annually will have to pay ₹ 54,600 income tax, a person earning ₹ 12,00,000 annually will have to pay ₹ 85,800 income tax, and a taxpayer earning ₹ 15,00,000 annually will have to pay ₹ 1,45,600 income tax.

So, with the help of these two charts you can clearly see that if a taxpayer gets more than ₹2,75,000 exempted from tax in the form of exemptions and deductions, then it will be beneficial for him to remain in the Old Tax Regime, otherwise any taxpayer who does not save will benefit in the New Tax Regime.

Shyamu Maurya
Shyamu Maurya
Shyamu has done Degree in Fine Arts and has knowledge about bollywood industry. He started writing in 2018. Since then he has been associated with Informalnewz. In case of any complain or feedback, please contact me @informalnewz@gmail.com
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