new Delhi . Are you thinking for tax planning now ie in March? When is the deadline almost over? Looking at the tax, are you not able to decide where to invest? Or do you not have enough savings to make investments that will help cut your tax bill? If you have not yet paid tax, then the new tax system can be beneficial for you in many ways.
In the budget of the year 2020, two options were provided for filing tax. Old and New Tax Slab. Taxpayers can choose any one of the two tax slabs according to their tax liability. Archit Gupta, Founder and CEO, Clear says that the new tax slab is different from the old slab in two ways.
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First…there are more slabs with lower rates. Second… by adopting the new system, you will not get the benefit of about 70 types of exemptions and deductions, which are available in the old tax slab.
new tax slab
Archit Gupta says that taxpayers should calculate the tax liability at the applicable normal rates after taking advantage of all kinds of exemptions and deductions on their income. For example, a salaried person under the old slab can claim exemption of Rs 50,000 for LTA, HRA, standard deduction. In addition, an individual taxpayer can claim deduction of up to Rs 1.5 lakh under section 80C of Income Tax on interest on housing loan and NPS contribution etc.
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In addition, the taxpayer needs to calculate the tax liability on his earnings as per the new tax slab. By comparing these two, you can choose a better tax slab for yourself.
In the new tax regime, the highest tax is levied on an annual income of Rs 15 lakh and above. This arrangement is beneficial for those taxpayers who claim less exemption and deduction. Those who fall in higher tax slabs and who have made necessary investments to save tax, they will not benefit much from this arrangement. Those who want to adopt the new slab rates, they will have to forgo all the exemptions like standard deduction, 80C, 80D, housing loan, NPS.
The deadline for filing Income Tax Return (ITR) for the financial year 2020-21 has passed on December 31, 2021. If you have not been able to file the ITR then you can file the belated ITR by the due date 31st March, 2022.
Tags: income tax, Income tax latest news, Income Tax Planning, income tax slabs, Tax
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