India’s Old vs New Tax System: In India, taxpayers have two main options for paying income tax that is the old tax system and the new tax system. Both have their advantages, and understanding the differences can help you save money.

India’s Old vs New Tax System:

Under the new tax system, the income tax rates are lower, but there are no exemptions or deductions. This means that if you do not claim deductions for things like insurance premiums or home loan interest, the new system might be more beneficial. For example, individuals earning less than ₹7 lakh a year can pay no tax due to a rebate under section 87A.

On the other hand, the old tax system allows taxpayers to claim various deductions. You can reduce your taxable income by investing in schemes like the Public Provident Fund (PPF), Employee Provident Fund (EPF), or life insurance. There are also deductions for home loan interest and medical insurance premiums. The old tax system may be better for those who make use of these exemptions.

For salaried employees and pensioners, the new tax system provides a standard deduction of ₹50,000. However, it does not allow the usual tax-saving options that many people rely on. If you earn less than ₹7 lakh a year and do not have significant expenses like home loans or insurance, the new tax system can save you money.

In contrast, if you are someone who regularly claims deductions for health insurance or invests in tax-saving schemes, the old tax system might be more advantageous. The choice between the two systems depends on your income and spending habits.

Overall, while both tax systems have their benefits, you should choose the one that best suits your financial situation. For many, the old system is beneficial if you plan to take advantage of exemptions, while the new system is simpler and better for those with fewer deductions. Make sure to assess both options before filing your income tax returns.

Also Read: How to Buy Gold from Dubai Without Paying GST: Here is Simple Guide

Share

• 
• 
• 
• 
• 
•