Indian Government Issues Clarification on Old and New Tax Regime

In light of recent misinformation circulating on social media platforms regarding India's new tax regime, the Indian government has issued a clarification to debunk any misleading claims and provide accurate information to taxpayers.

The new tax regime, introduced under section 115BAC (1A) in the Finance Act of 2023, presents a structured comparison with the existing old regime. This clarification aims to ensure that taxpayers understand the differences and implications of both regimes clearly.

Key Points Clarified by Indian Government on Old and New Tax Regime

The Indian Government has issued the following comparison between the New and Old Tax regime:

New Tax Regime (115BAC(1A)) for FY 2023-24:

• 0-3 lakhs: 0%
• 3-6 lakhs: 5%
• 6-9 lakhs: 10%
• 9-12 lakhs: 15%
• 12-15 lakhs: 20%
• Above 15 lakhs: 30%

Existing Old Tax Regime:

• 0-2.5 lakhs: 0%
• 2.5-5 lakhs: 5%
• 5-10 lakhs: 20%
• Above 10 lakhs: 30%

It is important to note that the new regime applies to individuals other than companies and firms by default from the financial year 2023-24, with the corresponding assessment year being AY 2024-25.

Tax Rates Lower in New Tax Regime

Under the new tax regime, the tax rates are notably lower, but taxpayers should be aware that various exemptions and deductions, other than standard deductions such as Rs 50,000 from salary and Rs 15,000 from family pension, are not applicable as in the old regime.

The government emphasizes that while the new tax regime is the default, taxpayers have the option to choose the regime they find most beneficial. Taxpayers can opt out of the new tax regime until filing their returns for the AY 2024-25. Eligible individuals without any business income have the flexibility to select the regime for each financial year, allowing them to switch between the new and old tax regimes as per their preference.

This clarification aims to dispel any confusion among taxpayers and ensure they make informed decisions regarding their tax obligations. The government encourages taxpayers to seek professional advice if they have any doubts or queries regarding the new tax regime.

For further details and updates, taxpayers are advised to refer to official government sources and avoid relying on unverified information circulating on social media platforms.