However, no changes have been made in the old tax regime. In the old regime, taxpayers get the benefit of various deductions and exemptions. So, if your annual income is Rs 10 lakh, which regime will be better for you?

In the old tax regime, taxpayers could avail benefits under various sections like 80C (up to Rs 1.5 lakh), 80D (health insurance premium) and standard deduction (Rs 50,000).

Old tax regime

Total deduction: ₹2,25,000
Taxable income: ₹10,00,000 – ₹2,25,000 = ₹7,75,000

Tax calculation:

Up to ₹2.5 lakh: Nil
₹2.5 lakh to ₹5 lakh: 5% = ₹12,500
₹5 lakh to ₹7.75 lakh: 20% = ₹55,000
Total tax: ₹67,500
Cess (4%): ₹2,600
Total tax payable: ₹70,100

New tax regime

The new tax regime has lower tax slabs but there are no deductions and exemptions.
Taxable income: ₹10,00,000 – ₹75,000 = ₹9,25,000

Tax calculation:

Up to ₹3 lakh: Nil
₹3 lakh to ₹7 lakh: 5% = ₹20,000
₹7 lakh to ₹9.25 lakh: 10% = ₹22,500
Total tax: ₹42,500
Cess (4%): ₹1,700
Total tax payable: ₹44,200

Comparison and Conclusion

Old regime tax: ₹70,100
New regime tax: ₹44,200

If your annual income is ₹10 lakh, the new tax regime reduces the tax liability by ₹25,900. However, if you are able to avail maximum deductions available in the old regime, it can be beneficial for you. Taxpayers should choose the right option based on their income, expenses and investment plans. The new system is simpler, but the old system offers the benefit of more exemptions.

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The post Best tax regime: Which tax regime is better for income of Rs 10 lakh? first appeared on Rightsofemployees.com.