Tax Regime Old Vs New

ITR

Tax Regime Old Vs New

New tax regime – More slabs, lower tax rate but no Deductions and Exemptions Tax Slab

The Budget 2020 proposed a new income tax regime with more tax slabs and lower tax rates. This was introduced to simplify the tax system and lower tax rates, but it came with the removal of all the deductions and exemptions that were available under the old tax regime. Taxpayers having a choice between the new regime and old regime, they can select any one tax regime for their Tax Calculation.

The new regime provides for concessional tax rates and the number of tax slabs have increased.

But all the exemptions and deductions that were being used by taxpayers in the existing regime won’t be available in the new regime.

Income Tax Rate and slab for both Tax regimes for FY 2021-22.

Income slabs (INR)	Income Tax Rates (Excluding Surcharge & Cess)
Income slabs (INR)	Existing Tax Regime	New Tax Regime
Up to 250,000	Nil	Nil
250,001 –500,000	5%	5%
500,001 –750,000	20%	10%
750,001 –1,000,000	20%	15%
1,000,001 –1,250,000	30%	20%
1,250,001 –1,500,000	30%	25%
1,500,000 –5,000,000	30%	30%
5,000,001 –10,000,000	30%	30%
10,000,001 –20,000,000	30%	30%
20,000,001 –50,000,000	30%	30%
50,000,001 and above	30%	30%

List of exemptions/deductions and their applicability in both tax regimes.

Deduction Type	Existing Tax Regime	New Tax Regime
Standard Deduction of RS. 50000	Yes	No
Professional Tax deducted from Salary	Yes	No

Exemptions under Section 10 & 17
House Rent Allowance	Yes	No
Gratuity	Yes	Yes
Children Education Allowance	Yes	No
Leave Encashment	Yes	Yes
Leave Travel Allowance	Yes	No

Housing/Other Income
Other Income (Bank Interest, NSC Interest etc.)	Yes	Yes
Interest on Housing Loan - Self Occupied- Max 2 Lakhs	Yes	No
Income from House Property Income - Let Out	Yes	Yes
Loss from House Property Income - Let Out	Yes	No
Interest on Housing Loan - Additional Exemption	Yes	No
Exemption on Loan for Purchase of Electric Vehicles	Yes	No

Chapter VI-A Deduction
Deductions Under 80C
Employees Provident Fund	Yes	No
Voluntary Provident Fund	Yes	No
Public Provident Fund	Yes	No
Children's Education - Tuition Fees	Yes	No
National Savings Certificate (NSC)	Yes	No
Life Insurance Premium	Yes	No
Housing Loan Principal Repayment	Yes	No
Sukanya Samriddhi Scheme	Yes	No
Accrued NSC Interest	Yes	No
Mutual Funds / ULIP	Yes	No
Deduction under Life Insurance Pension Scheme	Yes	No
Employees contribution towards NPS	Yes	No
Senior Citizens Savings Scheme	Yes	No
Tax Saver Fixed Deposits / Term Deposits / Senior Citizen Saving Scheme	Yes	No
Interest on deposits in Saving bank accounts (80TTA)	Yes	No
Deduction in respect of Interest income (80TTB) for Senior Citizen	Yes	No
Investment in Infrastructure /tax saving bonds	Yes	No

Other Chapter VI-A Deduction
Medical Insurance Premium (Sec 80D)	Yes	No
Deduction towards Handicapped Dependents (Sec 80DD)	Yes	No
Deduction towards treatment of Specified Diseases (Sec 80DDB)	Yes	No
Deduction towards treatment of Specified Diseases (Sec 80DDB)	Yes	No
Interest Paid on Higher Education Loan (Sec 80E)	Yes	No
Deduction for Permanent Disability (Sec 80U)	Yes	No
Employer's contribution toward NPS (up to 10%)(u/s 80CCD)	Yes	Yes