Moving to New Income Tax Regime
I was talking to one of my colleague yesterday, who was asking which regime is better. There are mainly two regimes of Income tax, Old and New. Most of the people used to go for old regime because they can claim different items and get their reduced. Whereas in the new tax regime, it's a flat structure. Last time government of India has reduced the tax on new regime big time and that's why people are getting confusion which regime is better.
PC: Pixabay.com
For example, if you are not investing anything, or you don't have big HRA then new tax is best. But if you can get some HRA, home loan interest, term insurance and other things then old tax was better. But from this time whenever you try yo claim these things, you have to provide an explanation. Previously it was not there so now it's hard to do some rigging of the numbers. And it's hard to not get caught, so that's why it's better to come clean and go for new tax regime.
And that's why I have suggested him to go with the new tax regime. It's actually better to come clean and pay the tax which you have to pay. Sometimes rigging will have a problem later. I have been on the new tax from the last 3 years because I don't have a big investment which can give me tax benefit along with that I don't have a home loan, I don't have a big HRA and I don't invest in NPS. And that's the reason new tax is better for me instead of old tax regime.
And from this year, it's always better to go for new tax regime because you don't have to invest especially for the tax regime. You can invest accordingly.
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I'm still in the old tax regime because of HRA, NPS and other flexi options I have in my office. But it is quite frustrating to submit bills. If they increase benefits further next year, I might as well consider switching.
That's true and you can compare and see which is giving you more returns.
I switched to new one last year.
I saw no benefits in staying in the old regime.
That's true...and from this year it's much better.