Best Tax Slab according to your salary | Old vs New Tax Regime 2024: Which one saves you more money?

Summary

The video script by Prajwal Kammara discusses tax regulations in India without the need for a Chartered Accountant's study. It compares the old and new tax regimes, explaining tax slabs, deductions, and how to maximize tax savings for salaried employees with varying income levels. The script simplifies the complexities of tax filing and provides insights into which tax regime—old or new—might be more beneficial for different income brackets, using practical examples and a tax calculator tool for easy decision-making.

Takeaways

• 📚 The speaker, Praanjal Kamra, discusses tax slabs and regimes without having studied Chartered Accountancy, aiming to simplify tax understanding for the audience.
• 🔄 The government's primary motive for introducing a new tax regime was to reduce confusion and complexity, but it has seemingly increased it by maintaining both old and new tax regimes.
• 💼 For salaried individuals, understanding which tax regime to choose between the old and new is crucial, as it can significantly impact tax savings and liabilities.
• 📉 The new tax regime offers lower tax rates but fewer deductions compared to the old regime, which had simpler tax slabs but higher tax rates.
• 💰 Different income levels have different tax implications; for example, income up to 5 lakhs has no tax, 5-10 lakhs is taxed at 20%, and so on.
• 🔍 The script explains the tax slabs in detail, emphasizing how the tax rate applies to different income brackets and the importance of understanding these for tax planning.
• 📉 The old tax regime had more deductions but higher tax rates, which could be beneficial if one can utilize all the deductions available.
• 📈 The new tax regime simplifies tax calculations by reducing the number of deductions and offering lower tax rates, making it more straightforward for most taxpayers.
• 🏦 The script mentions that some deductions like Provident Fund (NPS) contributions are still available under the new tax regime, making it attractive for those focused on long-term savings.
• 🏠 Home rent allowance, house rent, and other deductions under section 80C are available only in the old tax regime, not in the new one.
• 🔑 The speaker suggests using an online tax filing platform that can automatically calculate tax savings, suggest the best tax regime, and handle the complexities of tax filing.

Q & A

What is the primary motivation behind the government's decision to introduce a new tax regime?

The primary motivation behind the government's decision to introduce a new tax regime was to reduce confusion and complexity in the tax system.

How does the new tax regime aim to simplify tax filing for a salaried employee?

The new tax regime simplifies tax filing by offering lower tax slabs, fewer deductions, and a more straightforward structure, making it easier for salaried employees to understand and file their taxes.

What are the tax slabs under the old tax regime for different income levels?

Under the old tax regime, the tax slabs are as follows: up to 2.5 lakhs no tax, 2.5 to 5 lakhs 5% tax, 5 to 10 lakhs 20% tax, and above 10 lakhs 30% tax.

What is the difference between the old and new tax regimes regarding deductions and exemptions?

The old tax regime has more deductions and exemptions available, such as various tax-saving investments and allowances. The new tax regime, on the other hand, has fewer deductions but offers a more simplified tax structure.

How does the new tax regime benefit a taxpayer with an income between 5 to 6 lakhs?

A taxpayer with an income between 5 to 6 lakhs benefits from the new tax regime as they fall into a lower tax slab of 5% compared to the old regime's 10% slab.

What is the standard deduction available to salaried employees under the new tax regime?

Under the new tax regime, the standard deduction available to salaried employees is up to 50,000, which is the same as in the old tax regime.

How does the rebate on tax payable differ between the old and new tax regimes?

In the old tax regime, the maximum rebate on tax payable is up to 12,500, whereas in the new tax regime, the rebate is up to 25,000.

What are some of the deductions that are not available under the new tax regime?

Some deductions that are not available under the new tax regime include deductions under section 80C for investments, education loan interest, and employer's contribution to NPS.

Why might someone still prefer the old tax regime despite the new regime's simplifications?

Some individuals might prefer the old tax regime if they have existing tax-saving investments and can claim various deductions that are not available under the new tax regime, potentially leading to more tax savings.

What is the recommended approach for a taxpayer to decide between the old and new tax regimes?

Taxpayers should consider their individual financial situation, including their income level, existing investments, and deductions. Using a tax calculator or consulting a tax expert can help determine which regime is more beneficial.

How can a taxpayer utilize technology to simplify the process of tax filing and regime selection?

Taxpayers can use online tax filing platforms that offer automated tax regime selection, calculation of tax savings, and step-by-step guidance through the tax filing process, making it more efficient and less confusing.