I am salaried person having total income of 1200000/-, Is it beneficial to choose old tax regime or new tax regime for FY 22-23. Is there any way to find out the best option without calculating full tax value under both regime.
You know that to opt for new tax regime we have to forgo some exemptions & deductions, which are not allowed under new tax regime for FY 2022-23, like
- Standard deduction (it is made allowed in new tax regime from FY 2023-24, but not allowed in FY 22-23)
- Family pension deduction (it is made allowed in new tax regime from FY 2023-24, but not allowed in FY 22-23)
- Deductions u/s 80C
- Deduction u/s 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80TTA, 80TTA, 80U etc.
- Deduction of interest u/s 24.
- LTC exemption u/s 10(5)
- HRA exemption u/s 10(13A)
- Exemption for various allowances u/s 10(14).
- Adjustment of house property loss from other head not allowed in new tax regime.
- many more.
You need to calculate the value of these exemption and deduction which are applicable in your case and which you are eligible to claim if you file ITR in old tax regime. But if you file ITR in new tax regime then you have to forgo these exemptions & deductions. So find out the exemptions forgone to opt new tax regime.
Please note that tax on 1200000/- in old tax regime is equal to tax on 1440000/- in new tax regime Hence
equalization factor is (1440000-1200000) i.e. 240000/- in your case.
Thus if the value of deductions & exemption which are required to be forgone is more than 240000/- then old scheme is beneficial but if your deductions & exemption’s value is less than 240000/- then new scheme is beneficial.