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In the latest Budget announcement for 2024, Finance Minister Nirmala Sitharaman did not introduce any rebates related to income tax, leaving the Indian middle class without any immediate relief. The Finance Minister maintained the existing tax rates for both direct and indirect taxes, including import duties, following convention.
Old vs. New Income Tax Regime
One significant change introduced in the Budget 2023 by the Modi Government was the establishment of the new income tax regime as the default option. While this new regime offers a simplified approach, taxpayers still have the choice to opt for the old tax regime. The decision between the old and new income tax regimes hinges on various factors.
Opting for the new tax regime means forgoing several tax deductions and exemptions available under the old regime. Salaried individuals, under the new regime, lose out on benefits like standard deduction, House Rent Allowance (HRA), Leave Travel Assistance (LTA), and various allowances associated with job duties. Additionally, deductions under Section 80C (covering items like EPF, LIP, School Fee, PPF, NSC, ELSS, home loan repayment, etc.), 80D (for health insurance premiums), and 80 CCD(1) & 80 CCD(1B) (for NPS) are not applicable. The claim for home loan interest for self-occupied properties and the ability to set off or carry forward losses from let-out properties are also forfeited under the new scheme.
Comparative Analysis of New and Old Income Tax Regimes
In this comparative analysis, we discuss the tax implications associated with various income levels under both the new and old income tax regimes. The provided table provides a transparent comparison of tax amounts, aiding individuals in understanding the financial consequences of choosing either the contemporary or traditional approach.
