Whenever the budget comes out, it is followed by reactions, analysis, and other stuff surrounding it. It is a battle between the old and new tax regimes that dominate the news after that. People start analyzing the goods and bads of the budget using various parameters. In this article, we will contribute to that by informing you about Old vs New Tax Regime Calculator.
Old vs New Tax Regime Calculator
Calculating tax is not exactly rocket science but the older system did prove to be a challenge and complicated stuff for filers as well as accountants which is one of many reasons why the new regime was proposed. However, the main difference between the old and new regimes is that the former had provisions to get reductions and exemptions while the newer one has better slab and tax rates.
Also, while the new regime has been made the default tax system people still have the choice of opting for the older regime which gives you the power to choose but also the dilemma of a decision to make.
Now we understand it is not easy by any means to find out which one is better and so the old vs new tax regime calculator might be of some help here. Now what you need to understand about this calculator is that it is a tool using which you can calculate your tax amount under old as well as new regimes. To understand the concept better we will take the example of a person whose salary is 12 lakhs.
Now under the new regime, this person won’t get any exemptions but just a standard reduction of 50,000 rupees and so their taxable amount comes to 11,50,000 rupees. However, a person under the old tax regime benefits from stuff like HRA deduction, LTA deduction, and more.
This brings down their taxable income on a bigger or smaller scale compared to what would happen under the new tax regime. So if the exemptions and deductions cut your taxable income by more than 50,000 rupees then the older tax regime is better for you while if the amount cut from your taxable income is less than 50,000 rupees in this case then the new tax regime is better for you.
New vs Old Tax Regime Comparison
The question of which tax regime is better has raged on for the past few days and will likely hang around for a few more days. However, this won’t stop more articles based on new vs old tax regime comparisons from popping up now and then. So to put things into perspective look at the below table to refresh your memory on the tax slabs.
Rate of tax/Income slab
Up to 2,50,000 rupees
Up to 3,00,000 rupees
From 2,50,001 to 5,00,000
3,00,001 to 6,00,000
6,00,001 to 9,00,000
9,00,001 to 12,00,000
5,00,001 to 10,00,000
12,00,001 to 15,00,000
More than 10,00,000
More than 15,00,000
Now while the new tax regime provides you with better tax rates and slabs and comes across as the undisputed better choice the numbers don’t show the whole picture. The old tax regime has deductions and exemptions like 80C, 80D, and more that can help you bring down the taxable income by a bigger or smaller margin than what the newer tax regime has to offer. And so it is again a stalemate when deciding which tax regime is better and thus using a calculator to calculate your tax amount as per your income would be the best way to help you pick among the two
Old vs New Tax regime which is better?
You can ponder over this thought for days or weeks or even use an old vs new tax regime calculator but you still won’t come across a solid answer. The reason for this is simple, both tax regimes have something different to offer and the difference made by this distinguishing factor plays a major role in deciding which tax regime will work out better from individual to individual. Let’s take an example of a person whose income is 5 lakhs and one whose income is more than 15 lakhs to explain our point.
Under both new and old regimes, a person with an income of 5 lakhs will be charged 5% and for an income of more than 15 lakhs, both will be charged 30% tax. While the tax percentages are the same in both these cases the taxable amount changes. A person opting for the new tax regime gets a standard deduction of 50,000 rupees while people under the old tax regime get the benefit of claiming various deductions and exemptions.
So you answer the question, old vs new tax regime which is better the best answer would be either. If you earn an income of up to 15 lakhs then the newer tax regime might be better for you because your deduction or exemptions might be taken care of by the standard deduction. However, for people with an income of more than 15 lakhs the older tax regime might be better since they might be able to claim more deductions/exemptions and be able to bring down their taxable income handsomely.
It is said that if your exemption/deduction crosses the figure of 3.57 lakhs then the older regime is better for you otherwise you should go with the newer one. However, all of this is still fresh and rough assumptions and so it is better to do your calculations before choosing between either.
Which Tax regime is better for 30 lakhs?
Now since the article is about the old vs new tax regime calculator it is only expected that people from various income groups will be curious to know if the new tax regime is better for them or if the older one is. Taking into consideration the salary of 30 lakhs we are providing a table below to address this question.
Old Regime (no deductions)
Old Regime (with deductions)
So as we concluded above the older tax regime is better for people with income over 15 lakhs the table also has provided the same answer to the question of which tax regime is better for 30 lakhs.
Also Read: Section 10 of Income Tax Act: Everything to Know
New Tax Regime Calculator FY 2023-24
We have been talking about the old vs new tax regime calculator and looked at various figures which have helped us conclude that the newer tax regime is better for people with low income while the older tax regime is better for people with higher income.
However, our findings are not to be taken as something written in stone as the new system is as old for us as it is for you. And for this reason, we would ask you to search for the New tax regime calculator FY 2023-24 which will introduce you to a few websites where you can calculate your tax amount as per new regime and then decide for yourself which tax regime suits you better.
On that note, the article on the old vs new tax regime calculator comes to an end. We looked at the new vs old tax regime comparison and found the answer to the question: old vs new tax regime which is better. We also looked at which tax regime is better for 30 lakhs as we concluded the newer tax regime suits low-income people while the old regime suits high-income people. However, if you aren’t sure then it is better to check for yourself by using the New Tax Regime Calculator FY 2023-24.