Earning a salary of Rs 10 Lakhs? Confused on how much income tax to be paid under the new regime? You are not alone. Everyone seems confused on how income taxes are calculated under the new regime. Most of the tax exemptions and tax deductions you currently enjoy are gone.
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Why all this confusion? Well, you are a salaried employee earning Rs 10 Lakhs a year and are confused on choosing between the old tax regime and new tax regime.
Use an Income Tax Calculator to calculate taxes in the old and new tax regime.
After Standard Deduction of Rs 50,000 and Section 80C tax deduction of Rs 1,37,500 the net taxes paid in the old tax regime is Rs 78,000. This is same as the new tax regime on salary of Rs 10 Lakhs. If you avail higher tax deductions than Rs 1,87,500 its better to stay in the old tax regime.
See Also: HRA Tax Calculation
List out all the tax deductions and tax exemptions you claim:
If you use most of these tax deductions, stick to the old tax regime.
Well, if you earn Rs 12.5 Lakhs a year and avail many tax deductions and tax exemptions, stick to the old tax regime.
You have to pay tax of Rs 1,30,000 under the new tax regime on salary of Rs 12.5 Lakhs a year. If you avail standard deduction, Section 80C up to Rs 1,50,000 and Section 80D up to Rs 25,000 a year, net tax payable is Rs 1,24,800. Stick to the old tax regime.
If you are investing in ELSS through SIP, continue doing so even if you are shifting to the new tax regime. Save and invest not just to save taxes, but also achieve financial goals.
Continue with term life plans, health insurance plans which protect against risk. This protects your family against an untimely demise and emergency hospitalization.
See Also: HRA Calculation from Basic Salary
Invest based on risk profile, not for tax saving alone but also for family’s future. PPF is an excellent investment for conservative investors, while ELSS is great for aggressive investors. Look at tax-efficiency of an investment to squeeze the juice out of every rupee.
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