Shekhaliya Consultancy offers a comprehensive suite of services, including
accounting, payroll processing, tax preparation, financial advisory,
and global payroll solutions.
How do I choose between the old and new tax regimes?
Choosing between the old and new tax regimes depends on various factors such as your income, eligible deductions, and financial goals. The key differences are:
Title
Criteria
Old Tax Regime
New Tax Regime
1
Tax Rates
Higher
Lower
2
Deductions and Exemptions
Multiple available (e.g., Section 80C, 80D, HRA)
Limited; Standard deduction only
3
Best For
Individuals with significant deductions and exemptions
Individuals with fewer deductions
Decision Making:
Evaluate Your Deductions: Calculate potential savings from deductions under the old regime (e.g., investments under Section 80C, health insurance premiums under Section 80D).
Use an Income Tax Calculator: Compare the tax liability under both regimes using an income tax calculator to determine which option results in a lower tax burden.
What are the major deductions and exemptions available under the Income Tax Act, and how do they differ between regimes?
Sr No
Section
Old Tax Regime Deductions
New Tax Regime Deductions
1
80C
Investments in PPF, NSC, ELSS, etc.
Not applicable
2
80D
Health insurance premiums
Not applicable
3
24(b)
Interest on home loan
Not applicable
4
HRA
House Rent Allowance
Not applicable
5
Standard Deduction
INR 50,000 for salaried individuals
INR 50,000
Under the old tax regime, taxpayers can claim various deductions for investments, insurance premiums, home loan interest, and more. However, the new tax regime simplifies the tax calculation process by offering lower tax rates and a standard deduction, but it restricts other deductions and exemptions.
How does the income tax calculator determine my tax liability, and can it be used by both salaried and self-employed individuals?
An income tax calculator estimates your tax liability by:
Inputting Income Details: Entering total income from various sources, including salary, business income, and other earnings.
Deducting Eligible Amounts: Subtracting eligible deductions and exemptions as per the chosen tax regime.
Applying Tax Rates: Applying the relevant tax slab rates to the taxable income to calculate the total tax payable.
The calculator can be used by both salaried and self-employed individuals. It helps in estimating taxes based on the selected tax regime, considering income sources, deductions, and exemptions.
