Category: Miscellaneous

04 Feb 2023 07:46

Joined:	20/04/2018
Level:	Gold
Points:	55771

Points:	5

Tax exemption is different from no tax

The new tax regime for direct taxes has no incentive to save money. There is no section 80C and no exemption for even the medical benefits. One understands that the standard deduction of Rs.50K will be applicable to both the old and the new regime, but one really does not understand what is in store. Members who are experts in direct tax may please clarify.

Be that as it may, it does appear to be a case of lack of clarity. Upto 3 lakhs there is no tax and then it goes on like 5 percent and so on. Those in the 15 lakhs and above category will pay 30 percent. Fine. When one earns such a high salary, he or she is bound to pay more taxes.

However, one understands that one has to get a refund, after paying the income tax, in the new regime. This means an expenditure for the taxpayer, as he or she may not be able to file the returns on his or her own initiative, online. That is if one can show all receipts, like the capital gains on mutual fund schemes where the gain is less than one lakh in that financial year, for example, he or she will get the refund.

#769286

04 Feb 2023 12:06

Joined:	10/12/2016
Level:	Diamond
Points:	109190

Points:	4

Last year also in the income tax proposal there was no 80C feature available and only the people filing IT return as per old scheme were claiming that. So, last year people who opted for the new regime did not get those exemptions.
This year also the proposed new regime is similar to last year and no 80C benefits will be there. Only difference is that this time due to slab readjustment the tax paid will be less compared to that of last year new tax regime.
Many people will now switch from old regime to this latest new regime as there will not be significant change in tax outgo between the two.

Knowledge is power.

#769299

04 Feb 2023 16:00

Joined:	02/06/2009
Level:	Diamond
Points:	145553

Points:	4

Definitely, tax exemption is different from no tax. Tax exemption is not universal and applicable only to people who save some money. No tax is universal. It is applicable to all as defined in the rule. If the rule says no tax up to 5 lakhs means all Indians need not pay income tax as long as their income is less than or equal to 5 lakhs.
We all know that there are two ways to calculate our taxes the old regime and the new regime. As per the advice of the tax consultant, we can choose the best among the two for our age and for our income level. As an individual, we may not know which is the best but we can consult the consultant and understand which is better for us.

drrao
always confident

#769310

05 Feb 2023 05:23

Joined:	25/11/2014
Level:	Diamond
Points:	43292

Points:	4

Tax exemption is not meant not to pay tax. Exemption is on the basis of the level of income in the last financial year. While considering the old tax regime, there is the scope of availing benefits of 80 C but the same feature has not been included in the new regime. Hence on calculations, there could the variations of benefits to the tax payers according to their selection of slabs.
In the latest feature, there is no benefits of 80 C and hence, the benefits by way of exemption in this feature would not provide them any benefits. However, we must take advice of the tax consultants to know which option could offer us more benefits.

#769311

05 Feb 2023 05:58

Joined:	10/12/2016
Level:	Diamond
Points:	109190

Points:	3

I will like to reiterate that by decreasing the slab rates marginally Govt is trying to bring parity between the old regime and now proposed latest regime. So idea is that until the tax exemptions are high in individual case one need not to go to opt for old regime. Making the new regime more lucrative will make people to cling to it and forget about their 80C benefits.
A tax consultant would definitely give a concrete advice on the issue of selecting old regime versus new regime.

Knowledge is power.

Tax exemption is different from no tax

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