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 |
23,400 |
-15,600 |
8,00,000 |
46,800 |
33,800 |
-13,000 |
8,50,000 |
54,600 |
44,200 |
-10,400 |
9,00,000 |
62,400 |
54,600 |
-7,800 |
9,50,000 |
70,200 |
65,000 |
-5,200 |
10,00,000 |
78,000 |
75,400 |
-2,600 |
10,50,000 |
88,400 |
85,800 |
-2,600 |
11,00,000 |
98,800 |
96,200 |
-2,600 |
11,50,000 |
1,09,200 |
1,06,600 |
-2,600 |
12,00,000 |
1,19,600 |
1,17,000 |
-2,600 |
12,25,000 |
1,24,800 |
1,24,800 |
- |
12,30,000 |
1,25,840 |
1,26,360 |
520 |
12,40,000 |
1,27,920 |
1,29,480 |
1,560 |
12,50,000 |
1,30,000 |
1,32,600 |
2,600 |
The above table shows that it is beneficial to opt for the New Tax Regime of Section 115BAC if your Income is more than Rs. 12,25,000 with your eligible Deduction under 80C and Section 80D (it has been assumed that Deduction of Rs.50,000 shall be Claimed under Section 80D).
The selection of New Tax Regime of Section 115BAC is not advisable up to your income Rs. 12,00,000 in case the Assessee is eligible for Deduction under Section 80C and 80D. |
