Old Tax Regime v/s New Tax Regime after Budget 2023

Income Tax Tax Savings & Deductions
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The new tax regime was the major highlight in the Budget 2023 by FM Nirmala Sitharaman.

The budget aimed to simplify the tax structure for the middle class. Under the new tax regime:

  • Income slabs were reduced
  • Standard deduction was introduced
  • Rebate limit increased

New Tax Regime was made the default regime. However, taxpayers can still opt for the old tax regime, which had seen no changes.

Simply stated, in the old regime, you pay tax after considering deductions u/s 80C for certain investments like mutual funds, EPF, PPF, etc., u/s 80D for medical insurance, and salaried individuals get a standard deduction and a benefit of house rent under HRA.

Talking about the new regime, you pay tax on income earned without any deductions.

Until the previous FY, it hasn’t been very popular because most people still paid less amount of taxes under the old regime as they could claim deductions. However, that does not mean you do not invest in your future securities.

Hence, to make the new regime attractive, the FM increased the rebate limit u/s 87A to ₹25,000 from ₹12,500 applicable from FY 2023-24. So, it’s a benefit to people who earn income up to ₹7 lakhs as their income will be completely tax-free, and also don’t have to worry about making investments or purchasing insurance to save taxes.

Many of you are trying to evaluate which of the two regimes is better and relevant to your income situation!

Let’s look at how the new tax regime is made more attractive as compared to the old regime.

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Tax Rates: Old Regime & New Regime

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Now that we have understood the differences, let’s try to understand the taxability under both regimes as per the Budget 2023-24.

Let’s say, Aman who is 25 years old has a gross total income of ₹12 lakhs as under:

Income from Salary = 8 lakhs

Income from House Property = 1 lakh

Income from Other Sources = 3 lakhs

  • Interest Income from FD = 2L
  • Interest Income from Savings Account = 1L

He is eligible for a deduction u/s 80C of â‚ą1,50,000 as he has invested the amount in PPF and a deduction u/s 80TTA of â‚ą10,000.

What should be the taxability for Aman?

Solution:

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So, from the above table we can observe that even after claiming deductions under the old regime, the tax liability under the new regime is lower.
Hence, the regime to be chosen should be after comparing the tax liability under both regimes.

Read about Difference Between Old vs New Tax Regime - Learn by Quicko

1 Like
2

These year i will go for Old Tax Slab. since 80G & Other Stock Brokage Charges.
But for Next Year i want to OPT For New Tax Slab as it is Best.

But whatever My Loses in Short Term Capital Gain for these Year.
Can i carry forward STCG Loses in New Tax Slab.

Since these year i will use Old Tax Slab & Next Year i will Use New Tax Slab…

3

Hi @Aadil_Nakhwa,

Irrespective of any regime you’re opting for, you’re eligible to carry forward your short-term capital losses.

Hope this helps.

4

Hi

Is deduction upto Rs.10,000/- on savings account, applicable under Sec 80TTA, available under the new tax regime, be it AY 2023-24 or 2024-25?

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Hi @gdshan,

As per the Income Tax Act, deduction on savings account interest under section 80TTA is only available in the old tax regime.

hence, if you opt for a new tax regime, you’re not eligible to claim such a deduction.

Hope it helps.

6

Hi

Thanks for clarifying.

1 Like
7

Hi,
My total CTC is 7,50,000 and my gross salary is around 6,95,000.I am also getting. a shift allowance of Rs.200 per day and I have to work 5 days a week.So Based on that ,how much tax will I have to pay if I choose the new tax regime and also claim the Rs.50000 Standard deduction introduced from this financial year??

Also is the New Tax regime a good option for me or I need to go for the Old Tax regime to pay close to Rs.0 in taxes(Basically no taxes).

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Hi @Heath_Slayer

FY 2023-24 onwards, the standard deduction of â‚ą50,000 will be available under the new regime as well.
Also, the tax rebate limit has been raised to 7 lakhs under the new regime.

Considering there are no other deductions, the new regime will be beneficial as the tax liability comes to nearly â‚ą0. If in case tax liability arises as well, the tax rates have also been revised, so tax liability under the new regime will be less than the old regime.

Hope this helps.

9

I am working in a private company. Also I have done intraday trading in FY2022-FY2023 (Jan 2023-Mar2023). I am going to file ITR3 with old regime (Old regime was done through TDS.)

For FY2023-2024 , I am planning to shift to new regime (That looks beneficial for me as of now). Will I be able to switch back to old regime may be few years down the line? If yes, how many times?

Please explain regarding switching of regimes for a person who works in private company and doing intraday trades at same time?

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Hi @Justin

A resident individual can switch regimes every year only if he has no business income.
If you’re working in a private company and also involved in intraday trading, which is a speculative business income, you will not be able to switch regimes more than once.

Read more about switching regimes.

Hope this helps.

11

Hi @Shrutika_Shah

I report my income under “income from business” and I do not have salary income. For the AY 2023-24, can I choose filing ITR3 under new tax regime now? I did not file form10E as yet.

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Also, can you please guide on which business should I choose for an F&O trader while filing Form 10IE

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is ITR3 started / available ?

14

Hi @HIREiN

ITD has enabled the filing of ITR 3.

You can also prepare your ITR on Quicko (DIY) and file using the JSON or book a MEETwhere a tax expert shall prepare and file your ITR.

Hope this helps.

15

Hi @gdshan

If you do not have to get your accounts audited to opt for the new regime, the due date for filing Form 10 IE is on or before the due date of filing the ITR for the relevant assessment year (AY). For example, for AY 2023-24, the due date for filing ITR is 31st July 2023.

There is no specific business code mentioned for F&O or intraday business. You may also select category as 13 Finance and nature of business as 13010 - Investment activities.

Hope this helps.

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Hi @Shrutika_Shah

Thanks for clarifying. I was feeding the details of my income into the ITR 3 excel utility released by the IT Dept. It seems there is a bug as I was choosing the option of tax computation under new tax regime and when I entered the date of filing the Form 10IE as 27th May, 2023, I am getting a message that “the Date cannot be beyond 31/03/2023 for the AY 2023-24”.

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Hi @gdshan

This seems to be a bug from the income tax department.
You can raise a grievance on the e-filing portal and report such an issue.

Hope this helps.

18

Hello!

Simple doubt.

I earn mostly from fixed deposit no salary income.

My income is â‚ą6,00,000

As per new regime it will be zero tax liability.

So the tds decuted by bank will be refunded fully right as per new regime.

Right?

19

Hi @Saurabh_Ghosh

Even if you don’t have salary income and have just IFOS, both incomes are taxable as per the slab rate for FY 2022-23.

Considering the bank has deducted a TDS of â‚ą60,000 (10% of â‚ą6,00,000) and your tax liability as per the new regime is â‚ą23,400 (considering there are no other incomes and deductions), then yes, you will receive a refund from the ITD of â‚ą36,600.

You can easily calculate your tax liability by entering your income, deductions, and tax credit (TDS, TCS, etc paid) under both regimes simultaneously on Quicko.

Hope this helps.

20

Isn’t as per new regime the income upto ₹7,00,000 are free from tax?