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OLD v/s NEW TAX REGIME

The ITR filing season has set in. This is the first year to choose, between the old tax regime with deductions and exemption and new tax regime without deductions and exemption but with lower slab rates, while filing your ITR. Taxpayer are confused as to which one to opt for. Let us broadly discuss the features of both the regime.

Let’s look at the old and new tax slabs for persons aged below 60 years of age:-

Special Income (U/s 111A, 112, 112A etc.) shall be taxable @ special rates.

1. Conditions for opting the New Tax Regime:-
• Assessee does not claim following deductions/exemptions:
• Under House Property Income-
1. Interest u/s 24(b) for self-occupied property
2. Set-off of House property loss against other head
• Under Salary Income
1. Standard deduction of Rs.50,000 of Salary income
2. Entertainment Allowance and Professional Tax u/s 16
3. Leave Travel Concession u/s 10(5)
4. House Rent Allowance u/s 10(13A)
5. Allowance u/s 10(14)
• Under PGBP Income
1. Additional Depreciation of Plant and Machinery
2. SEZ Deduction u/s 10AA
3. Deduction for Tea, Coffee, Rubber Business
4. Deduction for Petroleum & Natural Gas
5. Deductions of Expenditure incurred on Scientific Research
6. Deductions of Specified Business
• Under Income from Other Source
1. Deduction from Family Pension u/s 57
2. Allowance for Income of Minor u/s 10(37)
• Assessee cannot set off any brought forward or unabsorbed depreciation attributable to deduction referred above.
2. Exercising the Option: The Option has to be exercised in form 10-IE along with ROI to be furnished u/s 139(1)-
1. In case of Individual/HUF not having business income: Assessee may choose whether or not to exercise the option in each PY. Therefore Assessee can choose any of the two-tax regime every year depending on their tax liability.
2. In case of Individual/HUF having Business income: Once the option is exercised it can’t be withdrawn except Assessee ceases to have PGBP.