Old tax regime Vs New tax regime: Tax exemption of Rs 2.5 lakh is available in the old tax regime. This includes tax exemption of Rs 1.5 under 80C, standard deduction of Rs 50 thousand and contribution of Rs 50 thousand to NPS. At the same time, in the new system only the standard deduction of Rs 50 thousand is available.
Old tax regime Vs New tax regime: Taxpayers filing income tax returns for the financial year 2023-24 (assessment year 2024-25) should be alert. Taxpayers who want to file ITR by adopting the old tax regime will have to file returns by 31st July. If you fail to do so, you will not get the benefit of the old system and income tax will be calculated on the basis of the new system.
Filing of income tax returns for assessment year 2024-25 has started from April 1, 2024. In this, a major change has been made in the rules for filing ITR. Under this, only those taxpayers who file income tax returns within the deadline of July 31, 2024 without paying penalty, will be given the benefit of the old tax system. After this the default system of the new tax regime will come into effect.
Benefits will not be available in delayed ITR
It is noteworthy that after the deadline of July 31, taxpayers are given a chance to file delayed ITR with penalty. Its last date is 31st December. If a taxpayer files ITR during this period, then income tax will be payable on it as per the new tax regime. He will also not get the benefit of tax exemptions and other deductions available in the old system. To avoid this, tax experts have advised to file returns by July 31.
Selection of tax system is important
According to the Income Tax Law, the new tax regime is the default regime i.e. it is already applicable for the taxpayer. If a salaried taxpayer wants to switch to the old tax regime, he will have to inform his employer in this regard at the beginning of the new financial year. If he does not do this, he will automatically come under the new tax regime and tax will be deducted from his salary on the basis of the income tax slab fixed under it. They will have to wait till the next financial year to claim income tax refund.
Salaried employees get freedom to change tax system
Even if a taxpayer fails to inform his employer, the tax system may change at the time of filing the income tax return. Provided this is done within the due date. According to tax experts, if the taxpayer feels that he is getting more benefit in the new or old system, then he can change it while filing the income tax return. The thing to note here is that this facility of changing the tax system every year is only for salaried people. Businessmen or traders can change only once, not every year.
Benefits of exemptions and deductions in the tax system
| Deduction or discount | Old tax regime | New tax regime |
| Standard deduction | Yes | Yes |
| HRA | Yes | No |
| Home loan | Yes | No |
| Investment under 80c | Yes | No |
| Health insurance | Yes | No |
| Education loan | Yes | No |
| LTA | Yes | No |
| NPS(80CCD02) | Yes | No |
| NPS(80CCD-1B) | Yes | No |
In the old tax system, tax exemption of Rs 2.5 lakh is available. This includes tax exemption of Rs 1.5 under 80C, standard deduction of Rs 50 thousand and contribution of Rs 50 thousand to NPS. At the same time, in the new system only the standard deduction of Rs 50 thousand is available.
