The Finance minister in her budget speech highlighted that tax burden on a person earning Rs. 15 lakhs shall be reduced by Rs. 78,000. However, this situation will rarely arise as a tax saving of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have analysed the following situation to understand the implications of this New Tax Regime of Section 115BAC:
Income |
Tax Liability under New Tax Regime of Section 115BAC |
Tax Liability under Old Tax Regime |
Net Tax
Saving
|
6,00,000 |
23,400 |
- |
-23,400 |
6,50,000 |
28,600 |
- |
-28,600 |
7,00,000 |
33,800 |
- |
-33,800 |
7,50,000 |
39,000 |
- |
-39,000 |
8,00,000 |
46,800 |
- |
-46,800 |
8,50,000 |
54,600 |
- |
-54,600 |
9,00,000 |
62,400 |
- |
-62,400 |
9,50,000 |
70,200 |
- |
-70,200 |
10,00,000 |
78,000 |
23,400 |
-54,600 |
10,50,000 |
88,400 |
33,800 |
-54,600 |
11,00,000 |
98,800 |
44,200 |
-54,600 |
11,50,000 |
1,09,200 |
54,600 |
-54,600 |
12,00,000 |
1,19,600 |
65,000 |
-54,600 |
12,50,000 |
1,30,000 |
75,400 |
-54,600 |
13,00,000 |
1,43,000 |
85,800 |
-57,200 |
13,50,000 |
1,56,000 |
96,200 |
-59,800 |
14,00,000 |
1,69,000 |
1,06,600 |
-62,400 |
14,50,000 |
1,82,000 |
1,17,000 |
-65,000 |
15,00,000 |
1,95,000 |
1,32,600 |
-62,400 |
15,50,000 |
2,10,600 |
1,48,200 |
-62,400 |
16,00,000 |
2,26,200 |
1,63,800 |
-62,400 |
16,50,000 |
2,41,800 |
1,79,400 |
-62,400 |
17,00,000 |
2,57,400 |
1,95,000 |
-62,400 |
It is NOT advisable to opt New Tax Regime of Section 115BAC if the Assessee is eligible for Deduction U/s 80C and 80D (it has been assumed that Deduction of Rs.50,000 shall be Claimed under Section 80D) , Standard Deduction U/s 16 and Deduction for Interest on Housing Loan U/s 24(b) from the Assessment Year 2021-22 |
