The new income tax regime contains seven tax slabs compared to four tax slabs under the old income tax regime. Union Budget 2020-21 Expectations for Income Tax: In the last year’s Union Budget, Finance Minister Nirmala Sitharaman had introduced a new income tax regime that contains seven tax slabs – Nil, 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, and 30 percent – in comparison to four tax slabs under the old income tax regime – Nil, 5 percent, 20 percent, and 30 percent. Both the tax regimes will continue and it will be optional for the taxpayers to choose a rule, Sitharaman declared in her budget speech. Although the new income tax regime has lower tax rates on income between Rs 5 lakh to Rs 15 lakh, no tax exemptions and deductions will be available in the government.
As a result, a salaried taxpayer would lose the current benefits of over Rs 5 lakh in the forms of exemptions and deductions available under various sections in the old income tax regime by switching to the new income tax regime. I have to pay additional tax of over Rs 1 lakh if the old income tax regime is discontinued,” said Saral Dev (name changed), who is a government employee and had taken home loan to purchase a flat in 2019.
New income tax regime vs old: What is good for you? Check comparison
