“Old Regime or New Regime? Which one should I choose?”
Now that is the kind of panic we are going to tackle in this blog. After you are done reading this blog, you will know the differences between the two regimes and which one should you opt for to save your taxes!
The Differentiation:
Let us go through the difference between the two regimes and the tax slabs, deductions and exemptions under them.
- Old Regime –
- Many Deductions and Exemptions
- Higher Tax Slabs
- New Regime –
- No Deductions and Exemptions
- Lower Tax Slabs
Now that we have the difference out of the way, let us now talk about the regimes as a whole;
-
Old Regime
The Old Tax regime provides that, for the annual income up to Rs. 2.5 lakhs there is a total exemption, 5% for personnel with annual income between Rs. 2.5 lakhs to Rs. 5 lakhs. 20% for income group between Rs. 5 lakh and Rs. 10 lakh and 30% for taxpayers belonging to the income group of Rs. 10 lakhs and above
Synopsis-
Nil for up to 2.5 Lakhs
5% for 2.5 to 5 Lakhs
20% for 5 to 10 Lakhs and,
30% for 10 Lakhs and above.
-
New Regime
The new tax regime is different in two ways from the old one. Firstly, it has more slabs with lower tax rates. And secondly, all the major exemptions and deductions available to taxpayers in the existing (old) tax regime are not allowed if the new tax regime is chosen.
Following is a table which shows the new tax slabs as well as the difference between Older and Newer tax slabs according to the respective regimes.
| Annual Income (Rs.) | Old Tax Rate | New Tax Rate |
| Up to Rs. 2.5 lakhs | Nil | Nil |
| Rs. 2.5 lakhs to Rs. 5 lakhs | 5% | 5% |
| Rs. 5 lakhs to Rs. 7.5 lakhs | 20% | 10% |
| Rs. 7.5 lakhs to Rs. 10 lakhs | 20% | 15% |
| Rs. 10 lakhs to Rs. 12.5 lakhs | 30% | 20% |
| Rs. 12.5 lakhs to Rs. 15 lakhs | 30% | 25% |
| Rs. 15 lakhs and above | 30% | 30% |
How to choose a regime such that I can save taxes?
To make things simpler, we have broken down the process into five simple steps which go as follows:
- Know the income group you belong to.
- Know your investments and deductions applicable.
- Calculate the tax payable according to the Old Regime and apply for all applicable deductions and exemptions.
- Calculate the tax payable according to the New Regime (be careful and aware of your income group you fall into, refer to the table above for more information).
- Compare both the amounts and select the one with lower tax payable.
And just like that you have countered the hassle of selecting the best Tax Regime for you in just five simple steps!
But you know what? Instead of going through the five steps, what if there was a tool which calculated and compared your taxes payable according to both regimes at just one click? That is exactly what Spine HR Suite’s Tax Calculator Offers you! You can learn more about Spine HR Suite here!