NOTE TO SALARIED INDIVIDUALS FOR FINANCIAL YEAR 2023-2024

Salaried Individuals should consider the following before filling up their tax declaration for FY 2023-24:

1. Salaried Individuals should choose their tax regime – Old or New tax regime for FY 2023-24 while declaring their taxes. If the employee fails to choose the tax regime, new tax regime will be considered as default tax regime.
2. Salaried Individuals have the option to choose/change to New/Old tax regime, every year.
3. The slabs have changed under the New tax regime. Under new tax regime the basic exemption is INR 3 Lakh as against 2.5 Lakh in old tax regime.
4. From FY 2023-24, under new tax regime if total income is less than INR 7 lakh, tax payable will be covered under rebate and there will not be any tax payable for the assesses. Hence salaried individuals with income less than or equal to INR 7.50 Lakh, before any deduction, can blindly choose new tax regime.
5. From FY 2023-24, standard deduction of INR 50,000 is available under new tax regime.
6. Old tax regime can be chosen if the salaried individual has deduction under HRA, Income from house property (Housing loan) and deductions greater than or equal to INR 1.50 Lakh under Chapter VIA (Section 80C, 80D etc.,). Giving example with three scenarios.

For FY 2023-24, Individual being Resident and not being a Senior Citizen and with assumption that there are no other income:

         i) For a salary of INR 25 Lakh and with deductions claimed equals 5 Lakh (including standard deduction), i.e. Old tax regime                 is better than new tax regime. If deductions are lesser than 4.25 Lakh (including standard deduction) new tax regime can                 be chosen.

         ii) For a salary of INR 20 Lakh and with deductions of 4 Lakh (including standard deduction), new tax regime is better than                   old tax regime. If deductions are more than 4.5 Lakh (including standard deduction) old tax regime can be chosen.

        iii) For a salary of INR 15 Lakh and with deductions of 4 Lakh (including standard deduction), new tax regime is better than                    old tax regime. If deductions are more than 4.10 Lakh, old tax regime can be chosen.

Also use tax calculator provided by your employer, before choosing Old/new tax regime.

Happy Savings !! 😊