Seventh Payment Commission New tax regime or old tax regime which will be better for government employees

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New vs Old TAX Slabs: Finance Minister Nirmala Sitharaman introduced the budget in Parliament on February 1. This was the last full Modi 2.0 government budget before the 2024 Lok Sabha elections. As everyone expected the government to give a tax break, the exact same announcement has also been made. According to the Finance Minister’s budget speech, if people with an income of 7 lakhs become part of the new tax regime, then they will not have to pay any tax. All taxpayers now have 2 options. First, whether they adopt the old tax system or become part of the new tax system. Let us know what would be best for a government employee.

What are the advantages of the new tax regime

Under the new tax regime, there will be no income tax up to Rs 3 lakh. On the other hand, 5 percent on income from Rs.3 lakh to Rs.6 lakh, 10 percent at Rs.6 to 9 lakh, 15 percent at Rs.9 lakh to Rs.12 lakh and 20 percent from Rs. .12 lakh up to Rs 15 lakh and over Rs 15 lakh you will pay 30 per cent tax on your income. Also, if your income exceeds Rs 15.5 lakhs, the standard deduction of Rs 52,500 will also be available.

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But taxpayers adopting this tax regime should keep two things in mind. First, you won’t be able to claim the tax break available in savings like NPS, PPF, etc. In simple words, you will not be able to save tax through 80C, 80D, HRA, etc. The second problem is that if your income is more than Re 1 of Rs 7 lakh, then you will have to pay taxes according to the flat tax slab.

old tax regime

This time too, the old tax system has not been changed by the government. Thus, there is no tax up to Rs 2.50 lakhs, 5% on income above Rs 2.5 lakhs and up to Rs 5 lakhs, 20% on income above Rs 5 lakhs and up to Rs 10 lakhs and 30% on income above Rs 10 lakhs Tax will be charged. But taxpayers will have the option to save tax through schemes like NPS, PPF, etc. Let me tell you, this is the reason why the new tax regime has not attracted many people.

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Keep this in mind when filing ITR

When submitting the income statement, you must mention that you want to be part of any tax regime. If you do not do this, it will default to being part of the new tax regime. Explain, a salaried person can return to the old tax regime after adopting the new tax regime. But business people do not have this facility.

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