Guidance From SGC - New - Old Tax Regime
Guidance From SGC - New - Old Tax Regime
Guidance From SGC - New - Old Tax Regime
Dear Incedoers,
In budget 2020, government had introduced a new income tax slab for individuals who will forego various tax exemptions and deductions
under a "Simplified Tax Regime". Further in union budget 2023, there have been minor changes in the new tax regime. Through this
document we wish to update you with the latest information for quick reference.
In the New Tax Regime, taxpayer will have to forego around 70 exemption and deductions, which they have been claiming in the old tax
regime. Some of the 70 exemptions and deductions, which will not be available in the new tax regime are mentioned below.
• Helper Allowance
• Meal Voucher
• Medical insurance premium : Rs. 25,000 for Self, Spouse and Children
• Medical insurance premium : Rs.25,000/- for parents (Rs.50,000/- for senior citizens)
• Expenses incurred on the medical treatment, training, or rehabilitation of a disabled dependent : Rs.75,000 (Rs.1,25,000/- for
the person with severe disability )
• Treatment of self or dependent for specified disease : Rs. 40,000 (Rs. 1,00,000 for senior citizens)
Note: Tax rebate under section 87A is available up to income of INR 7 lakhs in new tax regime while it is up to INR 5 lakhs in old tax regime.
The New Tax Regime has proposed lower income-tax rates, for income segments up to Rs. 15 lakh but you also need to remember that the
proposed lower tax rates will be applicable only if you are willing to give up various exemptions and deductions, which are available in the
Old tax regime under various provisions of the Income-tax Act, 1961.
This means that when you opt for the New Tax Regime, you will have to forgo some important exemptions such as Leave Travel Allowance
(LTA), House Rent Allowance (HRA), etc. and deductions available under chapter VI A of the Act that grant deductions under Section 80 [such
as 80C, 80CCC, 80CCD, 80D, 80DD, 80E, 80EE, 80G, 80GG, 80GGA, 80GGC, etc. available to salaried individuals and the deduction on interest
home loan, under Section 24(b).
Only the deduction under Section 80CCD(2) i.e., employer’s contribution in a national pension scheme (NPS) and standard deduction of INR
50,000 can be claimed in new tax regime.
Union Budget 2020 offers lower income tax rates by forgoing the tax exemptions/deductions or continue to pay tax under the existing
income tax laws by claiming the applicable exemptions and deductions. Briefly, the new regime (Option 2) will suit individuals in lower tax
brackets and those who have less amount of claims under the above heads. For others, the earlier rates be beneficial.
Note: As per the income tax provision employee needs to choose the Tax Regime at the start of every financial year. If employee has not
chosen the tax regime, for any reason, then the tax will be deducted according to new tax regime by default.