New Income Tax Regime: How much tax will you save by using the new regime? You can find out this way

If you are employed, the new income tax regime can be beneficial for you. Employed people have to inform their company’s finance department in April which regime they want to use.

New Income Tax Regime: The new rules of the new income tax regime have come into effect from April 1. If you are employed, you will have to inform your company’s finance department by the second or third week of April whether you will use the new or old income tax regime. The company’s finance department will deduct tax from your salary every month accordingly. If you were using the old regime till now, then you should also calculate your possible tax in the new regime once.

These things make the new income tax regime special

It is important for you to know some basic things about the new regime. First, the government has increased the basic exemption limit to Rs 4 lakh in the new regime. This means that if your annual income is up to Rs 4 lakh, then you do not need to pay tax. Second, in the budget presented on February 1 this year, Finance Minister Nirmala Sitharaman had said that people whose annual income is up to Rs 12 lakh will not have to pay tax in the new regime. Third, the government has also changed the tax slabs in the new regime. Due to this, even people with higher income will have to pay less tax.

Benefit to people who do not make much deduction

If you are employed, then in the new regime you will not have to pay tax on income up to Rs 12.75 lakh per annum. The new regime is very easy. The calculation of tax in it is also very easy. According to the calculation of Deloitte India, if a person with an annual income of Rs 24 lakh claims a deduction of up to Rs 8 lakh, only then the old regime will be beneficial for him. It is not easy to claim a deduction of up to Rs 8 lakh annually. This means that the new income tax regime is beneficial for taxpayers who do not claim much deduction.

Tax slabs in the new tax regime

Now it is important to know about the new tax slabs of the new regime. In this, the tax on income of Rs 4 lakh is zero. 5 percent tax is levied on income of Rs 4 lakh to Rs 8 lakh. Tax on income of Rs 8 to 12 lakh is 10%, tax on Rs 12 to 16 lakh is 15%, tax on income of Rs 16 to 20 lakh is 20%, tax on income of Rs 20 to 24 lakh is 25% and on income above Rs 24 lakh is 30%.

This is how tax will be calculated

Suppose your annual income is Rs 20 lakh. First of all, you have to deduct Rs 75,000 from your salary of Rs 20 lakh. After this, your taxable income will be Rs 19.25 lakh. Now, the first Rs 4 lakh of your income will be taxed at zero. Rs 20,000 will be taxed at the rate of 5% on income of Rs 4 to 8 lakh. 10% tax will be levied on your income of Rs 8 to 12 lakh. According to this, your tax on this income of Rs 4 lakh will be Rs 40,000 at the rate of 10 percent. Then, the tax rate on income of Rs 12 to 16 lakh is 15 percent. According to this, your tax on this Rs 4 lakh will be Rs 60,000. The tax on income of Rs 16 to 20 lakh is 20 percent. According to this, your tax on the remaining income of Rs 3.25 lakh will be Rs 65,000 at the rate of 20 percent.

You can also calculate the tax yourself

This way your total tax will be Rs 1.85 lakh (20,000+40,000+60,000+65,000). You will also have to pay 4% cess on this tax. This will be Rs 7,400. After adding this, your total tax will be Rs 1,92,400. This is just an example. Based on this example, you can easily calculate the tax on your income. You just have to keep in mind the tax slab. If a taxpayer’s salary is Rs 23 lakh, then he will also have to calculate the tax at the rate of 25% tax on 20 to 24 lakh.

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