New v/s Old Tax Regime - which one is good for you?
Alright, so now you obviously know that there are 2 regimes for Income Tax (that’s why you’re here reading this post). But which one is better, and which one should you opt for?
Let’s get to that in a minute. Before that, let’s see the specifics of each regime.
Tax slabs are different from Old Regime (explained below)
You cannot claim any exemptions (except some components such as Employer’s contribution to Provident Fund or Employer’s contribution to NPS, which are treated as exemptions)
You cannot claim any deductions.
This means that generally, your entire Gross Income is taxable.
Now, lets come to the Old Regime (or existing regime):
Tax slabs are different from New Regime (explained below)
You can claim exemptions such as LTA, HRA, Food Allowance, Education Allowance etc
You can claim certain expenses or investments done by you as deductions, such as ELSS Mutual Fund investment, payment towards Life Insurance and Health Insurance etc.
Here, out of your Gross Income (i.e the total salary your employer pays you), you can claim certain amounts as exemptions and certain amounts as deductions, and save tax. Therefore, your Taxable Income would generally be lower than your Gross Income.
Now you may ask “Well, doesn’t this mean that the old regime is better, since the taxable income that way would anyway be lower, right?”
It’s because the tax slabs are different in both regimes. So for certain income ranges, the tax percentage may be lower in the new regime than the old regime. A comparison of both is given in the table below:
Now here’s the golden question - which tax regime should you opt for?
Unfortunately, there’s no straight answer here. Because it depends on a lot of factors, like whether you can pay rent, claim LTA etc and claim exemptions, whether you will claim deductions, and subsequently, your income range. Only after you actually compute all of this, can you decide whether the Old Regime is beneficial for you or the New Regime.
But hey, that’s what Jackfruit is here to do! You can simply key in your salary details and check for yourself as to which tax regime would work better for you.
So hop on to https://www.jackfruit.one and check out which slab works best for you!
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