This time standard deduction has also been included in the new tax system. In such a situation, the question arises that which of these tax slabs can save you thousands of rupees. Let us know in which tax slab you can save more money and how.
Tax Saving on New Tax Regime: Finance Minister Nirmala Sitharaman has announced to exclude annual income up to Rs 7 lakh from the tax slab under the new tax regime in Budget 2023-24. Under the old tax regime, income up to Rs 2.5 lakh was tax free. However, in the old tax regime, there is a provision for standard deduction and many exemptions in other items. These benefits were not given in the new tax regime. This time standard deduction has also been included in the new tax system. In such a situation, the question arises that which of these tax slabs can save you thousands of rupees. Let us know in which tax slab you can save more money and how.
What is old tax regime
Under the Finance Bill 2023, no change has been made in the old tax regime. With an income of Rs 10 lakh in the old tax system, the taxpayer will get a total exemption of Rs 50,000 under standard deduction and maximum exemption under section 80C i.e. Rs 1.5 lakh with a total exemption of Rs 2 lakh. In this case, the income of the taxpayer will come down from Rs 10 lakh to Rs 8 lakh. In the old tax system, there is a provision of tax exemption on income of five lakhs under 87 (A), in such a situation, the total income of the taxpayer will be reduced from five lakh rupees to two lakh rupees. In this case, the taxpayer will not have to pay any tax.
new tax regime
As per the announcement of Budget 2023, the new tax regime will be the default. However, taxpayers can also opt for the old tax regime. Under the new tax slab also, the Finance Minister has announced a tax deduction of Rs 52,250. If your annual income is Rs 7 lakh, then under the new tax system, you will get a standard deduction of Rs 52,250. In this case, your income will be less than Rs 7 lakh. The government has declared income up to Rs 7 lakh as tax free. This means that if someone’s income is up to Rs 752500, then the taxpayer will not have to pay any tax. In the new tax system, if the taxpayer’s income is Rs 10 lakh annually, then after standard deduction of Rs 52500, income tax will be calculated at Rs 9,47,500. In this way, income tax will be payable to the taxpayer as follows.
This is how you can save tax
standard deduction on salary
Salaried employees are eligible for standard deduction from their salary income. Under the new tax regime, it will be Rs. 50,000/-, earlier it was nil.
Long Term Capital Gain (LTCG)
Tax exemption has been removed on long term capital gain of more than Rs 10 crore. Now the taxpayer will have to pay tax at the rate of 20 per cent on long term capital gain of more than Rs 10 crore.
Agniveer Corpus Fund
Exemption has also been given on Agniveer Corpus Fund. Apart from this, the government has also announced to provide tax deduction on the amount of contribution made by Agniveer and the Central Government on ‘Agniveer Corpus Fund’.
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