After studying both tax regimes, I feel its a no brainer that you should go ahead with the new one. In the earlier one, we were forced to make investments just to get deductions under 80C (and thus enter the lower tax slab). But with new regime, we enter the lower slab anyway so we can decide whether to invest or not. In other words, investment isn’t a forced activity now and tax saving instruments (like PPF, etc.) won’t have any inherent advantages over non tax saving instruments (like FD, NCD, etc.).
Isn’t this a win-win for the individual taxpayer, irrespective of whether you’re a salaried or self-employed?
The way you plan your taxes will primarily depend on the regime you opt for. While with the new tax regime, the itemized deductions might have been taken away, it offers more disposable income and the freedom to pick up investments of choice. Whereas, under the old tax regime, you can continue to make tax-saving investments and expenses and claim these deductions to bring down your total taxable income.
We recently released a video around the old and new tax regimes, where we talk about both the regimes in detail so you can make a calculated decision while opting for a regime.
You can also use the Tax Dashboard to understand your tax liability under both regimes.
It all depends whether you have any existing commitments …DEDUCTIONS AND EXEMPTIONS NOT TO BE CLAIMED IN NEW TAX REGIME
Standard Deduction, Entertainment Allowance and Professional Tax
Leave Travel Allowance
House Rent Allowance
Exemption u/s 10(14) i.e. Helper Allowance, Uniform allowance, etc.
Exemption of Rs.1500/- in case of clubbing of minor child income
Exemption for newly established units in Special Economic Zones
7. Interest paid on Home loan
Deduction under Chapter VIA i.e. All of the deduction claimed u/s 80C,80CCC,80D,80DD,etc except 80JJA(for new employment) and 80CCD(2) i.e. employer contribution on account of employee in notified pension scheme.
If you dont have any recurring investment commitment in any of the above- you can go for new scheme,also gross income above 7,5 10 lakhs new scheme is better i heard.
For example Iam a senior with a taxable income just below 7 lakhs last year.
I have no annual commitments in any of the above. I just did a SCSS 5 year FD fo ₹ 1.5 lakhs under 80c before March 31st & also availed 80TTB for seniors deduction of ₹50k from bank interest income etc & came under ₹5 lakh threshhold & 87A discount kicked in & NO tax & got the tds deducted as refund.
But this year I did not make any SCSS. & zero 80c deductions or any other deductions in old scheme except 80TTB .
basic income around ₹6 lakhs . But Iam still staying in old scheme to get atleast ₹50k 80TTB deduction from my bank interest income
Since I have to file ITR3 as a business due to F&O , with some minimal expense deductions , tax/brokerage expenses ,speculative losses etc combined in to my total income I might still walk away with no tax or minimal tax . (ofcourse have to spend 10-15 k for tax audit)
No clarification has been issued with regards to carry forward losses from trading in the new tax regime. However, as per our understanding, you can carry forward losses from Trading since they have not been specifically excluded for set-off and carry forward of losses under Section 115BAC.
An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year.
However, individuals having business income are not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime.
Once they switch back, they will not be allowed to opt for new tax regime again.
An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year.
But, if an individual has business income he/she is not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime.
Once they switchback, they will not be allowed to opt for a new tax regime again.
No clarification has been issued with regards to carry forward losses from trading in the new tax regime. However, as per our opinion, you can set off the brought forward losses from Trading as they have not been specifically excluded for set-off and carry forward of losses under Section 115BAC.
& got the tds deducted as refund.