When the finance minister announced the budget for 2023-24, the changes to the new regime provided relief to specific income brackets. At the same time, the India budget 2023 has also posed a question as to whether the old tax system will be discontinued in favour of the new structure.
The simple answer is no. For now, you can choose from the new or old system according to your income bracket. So, how can you select the old regime over the new one while paying taxes? Read on as we discuss the changes brought forth by budget 2023 and how you can persist with the old regime.
With the budget 2023 India announced a series of five tax reliefs for individuals and corporations. Among these five, four were designed for the new tax regime. While the new tax system was announced in 2020, it was made more lucrative during the recent budget announcement.
Some essential relief measures announced for the new regime are:
The new tax regime is the default taxation method across the country from 2023. However, the old structure remains an option.
While the new tax system has increased tax rebates and reduced overall tax liability, it has also eliminated most exemptions available under the Income Tax Act 1961. With the old regime, you could avail of over 70 deductions to minimise your tax liabilities. But with the new structure, a uniform standard deduction is the only option.
Plus, the budget 2023 did not incorporate any additions to the old regime.
The deductions available within Sections 80C and 80D of the Income Tax Act have remained the same since 2014 without accounting for inflation and other economic factors. This can be considered a sign that the old regime will not be subject to any more updates and may be phased out soon.
Despite no recent changes to the structure, the old regime is still an option for you. The only difference is that it is no longer the default choice. While filing your ITR, make sure to select the old tax system and enjoy the benefits of deductions to reduce your tax liabilities.
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Your income bracket will dictate the ideal regime for you. While the new structure offers tax rebates up to INR 7 lakhs, the old system comprises over 70 deductions to decrease your tax liabilities.
There have been no confirmed reports of the validity of the old regime. But with the emphasis on the new system, it is evident that the former will be phased out slowly.
