Deductions Under the New Tax Regime: How to Lower Your Taxes

New Tax Regime Deductions: If you earn income from your salary or business, it’s time to get ready to file your income tax return (ITR filing FY23-24). In March, taxpayers worked overtime with tax calculators and tax savings. And now they have two tax systems. If you have invested and want to save taxes, in this regard, taxpayers prefer to choose the old tax system, but because of the low tax, there is no shortage of choosing the new tax system. In the last budget, many changes were made to the new tax system, making it even more attractive. Did you know that you can also get benefits under the new tax regime?

Special features of the new tax regime

You should know that the new tax regime has now become a default option after Budget 2023. When it was introduced in Budget 2020, taxpayers could choose. But now this is the default value so unless you manually select the option to select old tax system, your ITR data will be saved only in the new tax system.

What are the exemptions in the new tax system that the system will use ?

  1. Previously, there was no provision for normal deduction in the new tax system, after the 2023 budget, now this system has a credit of 50,000 rupees, regardless of which tax group the taxpayer belongs to, so this benefit is available to everyone.
  2. If taxpayers fall into the disabled category, they can apply for a reduction in transportation allowance.
  3. Employees also receive exemptions for benefits or allowances for travel, transportation, transportation and clerical work.
  4. Voluntary Retirement Scheme (VRS) – Exemption is now also available for bonus and holiday contribution under certain conditions.
  5. Exemption can be given for donations up to 50,000 rupees.
  6. Employees who invest in an NPS (National Pension Scheme) account can also claim tax deduction on their contribution.
  7. If you earn survivor’s pension income, under the new system you can claim a deduction of up to Rs 15,000 or one-third of the pension amount (whichever is less).
Income taxes under the new tax system

In the new tax regime, there is no tax on annual salary of Rs 0-3 lakh. After this, 5% tax is levied on income of Rs 3 to 6 lakh, 10% on income of Rs 6 to 9 lakh, 15% on income of Rs 9 to 12 lakh, 20% on income of Rs 12 to 15 lakh and 30% on income above Rs 15 lakh. Apart from this, 4% is charged as Health and Education Cess.

Income Slab Income Tax Bill

0 – Rs. 3,00,000 nil

Rs. 3,00,000 to Rs.6,00,000 5%

Rs. 6,00,000 – 9,00,000 Rs 10%

Rs. 9,00,00 – 12,00,000 Rs 15%

12,00,000 – 15,00,000 Rs 20%

Above Rs. 15,00,000 30%.