New or old, which tax slab will be better for you, in which money will be saved

Income tax slab: The government announced a new tax slab in the budget 2020 (indicative picture)

The tax rate is lower in the new tax slab and as your income tax slab increases, so does the tax liability. In this, you cannot take advantage of exemption and deduction while you can take exemption in old tax regime.

In the budget of the year 2020, the government introduced a new tax regime (New Tax Regime) started. to the taxpayer income tax return ,ITR) To make it easier to file, this new system (New Tax Slab) was started. However, with the introduction of the new tax slab, the old tax regime or old tax slab was also retained. The government did this so that the taxpayers can choose between the new and old tax slabs according to their convenience and file ITR accordingly. You may also come across a question that whether new or old, in which tax slab ITR should be filed. So let’s know the answer.

Income tax rate in old tax regime or old tax slab depends on your income and income slab. Age is also seen in this. If your age is less than 60 years then the tax rate will be zero in the old tax slab up to 2.5 lakhs. Income from 2.5 to 5 lakhs will attract 5% tax and can avail exemption under section 87A. 5-7.5 lakh is taxed at 20 per cent, 7.5-10 lakh is taxed at 20 per cent, 10-12.5 lakh is taxed at 30 per cent, 12.5 to 15 lakh is taxed at 30 per cent and income above 15 lakh is taxed at 30 per cent.

old tax slab rule

If the age is between 60 years to 79 years and you fall in the category of senior citizen then there is zero tax rate on income up to 3 lakhs. 5% on 3-5 lakhs in which exemption under section 87A can be found. 5-10 lakhs are taxed at 20 per cent and income above 10 lakhs attracts 30 per cent tax. If the senior citizen is above 80 years of age, then there is zero tax on earning up to 5 lakhs, while 5-10 lakhs is taxed at 20 percent and income above 10 lakhs is 30 percent. This rule is of old tax regime or old tax slab.

The new tax slab is different from this. In this the tax rate is low and as your income tax slab increases, so does the tax liability. In this, you cannot take advantage of exemption and deduction while you can take exemption in old tax regime. Let us know about the income tax rate. There is zero tax on earning up to 2.5 lakhs. 5% tax on 2.5 to 5 lakh which can be exempted under section 87A. 10 percent tax is to be paid on 5.7.5 lakhs, 15 percent on 7.5 to 10 lakhs, 20 percent on 10-12.5 lakhs, 25 percent on 12.5-15 lakhs and 30 percent on income above 15 lakhs.

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Which tax slab to adopt

If your age is less than 60 years and total income is Rs 15 lakh or more and earning mainly comes from salary, then old tax slab will be beneficial for you. In this, you will be able to take advantage of exemption and deduction under the Income Tax Act. If you are not a senior citizen and your total income is Rs 5-6 lakh, then the new tax slab will be beneficial. If you fall in the low income group, then the new tax slab can benefit you. If you are not able to take advantage of exemptions and deductions or do not need them, then the new tax slab will be beneficial for you. For senior citizens or super senior citizens whose income is Rs 15 lakh, the new tax slab will be more beneficial.