HOW DO I CHOOSE THE NEW TAX REGIME AND PLAN MY TAX?

Choosing the tax regime at the beginning of the financial year is essential for every taxpayer a taxpayer has to decide whether the new tax regime is better than the existing scheme. Once the taxpayer chooses the tax regime at the beginning of the year, the investments and TDS or advance tax payable calculations are made accordingly. Also, the taxpayer has to furnish Form 10IE to the income tax department before filing the return if the taxpayer intends to opt for the new tax regime.

Let us see which tax scheme is better for whom through some examples:

Income	Amount	New Regime	Old Regime
Salary	12,50,000	12,50,000	12,50,000
Less: Standard Deduction	50,000	Nil	50,000
Less: Professional Tax	2,400	Nil	2,400
Gross Total Income	11,97,600	12,50,000	11,97,600
Less: Deduction u/s VIA	1,50,000	Nil	1,50,000
Net Taxable Income	10,47,600	12,50,000	10,47,600
Income Tax		1,25,000	1,26,780
Edu Cess @ 4%		5,000	5,071
Total Tax		1,30,000	1,31,851

As mentioned in above example, with all the existing deductions, new regime is better is saving tax by Rs. 1851/-. However, if taxpayer claims deductions in house property, health insurance, NPS, more tax can be saved in existing regime.

Example no 2: Where old tax regime is better

Income	Amount	New Regime	Old Regime
Salary	10,00,000	10,00,000	10,00,000
Less: Standard Deduction	50,000	Nil	50,000
Less: Professional Tax	2,400	Nil	2,400
Gross Total Income	9,47,600	10,00,000	9,47,600
Less: Deduction u/s VIA	1,50,000	Nil	1,50,000
Net Taxable Income	7,97,600	10,00,000	7,97,600
Income Tax		75,000	72,020
Edu Cess @ 4%		3,000	2,881
Total Tax		78,000	74,901

In above mentioned example, existing regime is better as taxpayer can save tax upto 3099/-. Moreover, taxpayer can claims deductions in house property health insurance, NPS to save more tax in old regime.