Do You Know What Are India’s Old And New Regime Taxes? | Academy Tax4wealth

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What are Indias Old and New Regime Taxes?
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According to the Income Tax Act, income tax is
collected on all
individuals, HUFs, partnership businesses, LLPs,
and corporations. Those whose income above the
minimal threshold level are subject to a slab
taxation scheme (i.e. basic exemption limit). A
slab system establishes different tax rates for
various income groups. That means that if a
taxpayers income rises, so will his or her tax
rate.
This kind of taxation helps the government
develop progressive and equitable levies. This
blog compares the previous and new tax regimes
in depth. Old Tax Regime Under the old
taxation structure, assesses may claim
deductions, exemptions, and allowances to help
them manage their taxes and save money. The
existing tax structure is complicated. Despite
the high tax rates, there are various ways to
reduce your tax liability. By the addition of
provisions to the Income Tax Act throughout the
years, the government has granted around 70
exclusions and deduction options to Indian
taxpayers, allowing them to decrease their
taxable income and so pay less tax.
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• Certain allowances, such as the House Rent
  Allowance (HRA) and Leave Travel Allowance, are
  included in your salary (LTA). Deductions enable
  you to reduce your tax liability by investing,
  saving, or spending on particular goods. The
  most popular and generous deduction is Section
  80C, which allows you to decrease your taxable
  income by up to Rs.1.5 lakh. Besides from that,
  there are a number of other exemptions and
  deductions that are commonly available to
  taxpayers.
• Because of a mix of exclusions and deductions,
  your taxable income might be lowered by lakhs.
  As a result, tax planning is essential to
  maximise your income, savings, and assets each
  year in order to keep your taxable income to a
  minimum.
• Advantages of Choosing the Old Tax Regime
• The old income tax regime created a savings
  culture in individuals over time by demanding
  investments in specialised tax-saving tools. It
  leads to saving for future events such as
  marriage, education, home buying, medical
  expenses, and so on.
• Disadvantages of Choosing the Old Tax Regime
• The investment lock-in period is harmful to
  liquidity.
• Current level of consumption as a result of
  pledged investment.
• There are just a few tax-saving investments
  available.

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• Maintaining evidence of claimed deductions is
  inconvenient.
• Inconvenient for taxpayers who have no or few
  tax-deductible transactions.
• New Tax Regime
• Let us begin with the new tax regime. It has six
  tax brackets, each with a reduced rate on income
  up to Rs. 15 lakh. Because of the different
  income levels and tax rates, multiple exemptions
  and deductions are not accessible. The new tax
  regime has both advantages and disadvantages.
• The new tax regime varies from the previous one
  in two ways
• The new system has increased the number of tax
  slabs, with decreased rates in the Rs. 15 lakh
  tiers.
• All exemptions and deductions available to
  taxpayers under the former regime will be
  unavailable under the new regime.
• Advantages of Choosing the New Tax Regime
• The current tax regime remains in place, and
  taxpayers can choose between the old and new tax
  regimes that best suit their

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• circumstances. There have been no fines enforced
  by the government for failing to switch to the
  new tax scheme.
• The new tax structure allows people to invest
  their money without restriction. Under the new
  programme, there are no mandated rules and
  restrictions controlling your investing pattern.
• With many tax brackets, you, the taxpayer, will
  be assigned to the one that best reflects your
  yearly income.
• Disadvantages of Choosing the New Tax System
• Your total taxable income will be higher without
  exemptions than it was under the previous tax
  structure.
• Conclusion
• Both the new and old income tax brackets have
  benefits and drawbacks. The taxpayer had several
  investment options due to the diversity of
  deductions and exemptions available under the
  previous tax regime. While their income has just
  recently began, the new tax regime is suited to
  new investors and individuals who have only
  recently begun their careers.
• As a result, the only method to establish whether
  tax regime old or new is better for you is
  to enter your income into both regimes and
  calculate the actual tax payable.

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