Old vs new tax regime: Which is better for you?

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With the commencement of financial year 2021-22, one must understand the tax structure that will follow henceforth. This is because, taxpayers now have two options (new and old tax regime) to choose from. In the old tax system, you get deductions like 80C, 80D and HRA. However, there is no such exemption in the new tax system. The income tax will have to be paid as per the slab. Moreover, the tax rates are much lower in the new tax slab.

In both the tax systems, if your income is less than Rs 5 lakh per annum, then you will get a rebate of Rs 12,500. This means people with taxable income up to Rs 5 lakh will not have to pay any tax. In the new tax system, senior citizens or super senior citizens do not get much tax exemption, the limit of tax exemption for all is only Rs 2.5 lakh.

Tax relief from the new regime are as follows: 

– Standard deduction on rent

– Income from farming Interest earned on PPF

– Maturity amount of insurance 

– Amount received from insurance on death 

– Compensation received on layoffs Leave encashment on retirement 

– VRS – Voluntary Retirement Scheme

– The amount received on Sukanya Samriddhi account

But if you’re still confused whether to opt for the new tax regime or stay with the older one, watch the complete video.