The new tax regime that offers favorable tax rates to individuals and HUF subject to taxes up to Rs. 15 lakh provided they give up a large amount of tax exemptions, and the losses are as complicated as the marital status of a millennium.
Just look at the list of exemptions and deductions that come out if you opt for the new regime:
· Leave travel concession
Live plus · House rental allowance
· Deduction under Section 80C, that is, capital-linked savings scheme (ELSS), fund (PF), insurance premium, school fees and repayment of the home loan principal.
· Deductions under 80D for medical insurance and 80G for donations
· Interest on home loans
· Rs 50 food vouchers for food
· However, deductions such as allowances (daily travel allowance) and employer contribution to the National Pension System are still available
The Minister of Finance, in her speech, mentioned that a person who earns Rs 15 lakh per year and does not use any deduction will pay only Rs 1.95 lakh of taxes, compared to Rs 2.73 lakh. This is a saving of Rs 78,000.
However, typically a salaried employee will be making use of a flat standard deduction of Rs 50,000. In addition, he or she will also have an HRA component, in which tax exemption can be obtained if the rent is paid. If the taxpayer is not for rent and has resorted to a home loan on a property he occupies, he can use the principal as a deduction of the total gross income, as well as the tax benefits on the interest paid. Even on rented property, interest can be offset by rental income and loss if any can be adjusted with any other type of income.