The citizens have the option to choose between the new and the old tax regime. While the tax rates in the new regime are lower, the old regime allows individuals to opt for deductions and exemptions.
If you want to find out the tax rates of both the regimes, then read this article.
The finance minister, Nirmala Sitharaman, announced a new tax regime in the Budget 2020. The tax rates in the new regime are lower compared to the old regime. However, people who opt for the new tax regime will have to forgo most of the exemptions and deductions. But if a taxpayer doesn’t want to forgo the exemptions and deductions, then he/she can opt for the old tax regime.
The citizens are allowed to choose between both regimes. Hence, a taxpayer can opt for a regime that can help him/her lower his/her tax liability.
New Tax Regime
| Annual Income | Tax Rate |
| Up to Rs. 2.5 Lakhs | 0 |
| Between Rs. 2.5 Lakhs and Rs. 5 Lakhs | 5% |
| Between Rs. 5 Lakhs and Rs. 7.5 Lakhs | 10% |
| Between Rs. 7.5 Lakhs and Rs. 10 Lakhs | 15% |
| Between Rs. 10 Lakhs and Rs. 12.5 Lakhs | 20% |
| Between Rs. 12.5 Lakhs and Rs. 15 Lakhs | 25% |
| Above Rs. 15 Lakhs | 30% |
Old Tax Regime
Tax Rates for Individuals Below 60 Years of Age-
| Annual Income | Tax Rate |
| Up to Rs. 2.5 Lakhs | 0 |
| Between Rs. 2.5 Lakhs and Rs. 5 Lakhs | 5% |
| Between Rs. 5 Lakhs and Rs. 10 Lakhs | 20% |
| Above Rs. 10 Lakhs | 30% |
Tax Rates for Individuals Between 60 and 80 Years of Age-
| Annual Income | Tax Rate |
| Up to Rs. 3 Lakhs | 0 |
| Between Rs. 3 Lakhs and Rs. 5 Lakhs | 5% |
| Between Rs. 5 Lakhs and Rs. 10 Lakhs | 20% |
| Above Rs. 10 Lakhs | 30% |
Tax Rates for Individuals Above 80 Years of Age-
| Annual Income | Tax Rate |
| Up to Rs. 5 Lakhs | 0 |
| Between Rs. 5 Lakhs and Rs. 10 Lakhs | 20% |
| Above Rs. 10 Lakhs | 30% |
It is important to keep in mind that in the new tax regime, the exemption limit is Rs. 2.5 Lakhs for every taxpayer. There is no higher exemption limit for senior citizens. However, if a senior citizen wants to opt for a higher tax exemption limit, then he/she can pick the old regime.
In case a person wants to opt for the new tax regime, he/she will have to forgo exemptions and deductions, such as house rent allowance, leave travel allowance, Section 80C deductions, Section 80D deductions, standard deduction, etc.
Furthermore, individuals who want to calculate their tax liability easily can use an income tax calculator. This calculator will calculate the tax amount based on the details entered by the person.
Which Regime to Pick?
If you don’t have any deductions or exemptions to claim, then you should consider the new tax regime. However, you can opt for the old regime if you don’t want to forgo your exemptions and deductions.
It is wise to calculate the tax liability under both the regimes using a calculator. Hence, you will understand which tax regime is more beneficial for you.
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