How the new income tax regime will impact taxpayers under different incomes
Will taxpayers save under the new regime?
The tax exemption given to incomes up to Rs 5 lakh remains unchanged. Salaried taxpayers who opt for the new regime will have to forgo standard deduction as well as exemptions under chapter VI-A, including HRA, investments under Section 80C, medical insurance premium and even leave travel allowance which is tax free, if claimed once in a block of two years.
New income tax slabs and rates
What stays: Around 50 tax exemptions remain untouched, including- Standard deduction on rent, agricultural income, income from life insurance, retrenchment compensation, VRS proceeds, leave encashment on retirement.
Surcharges on tax remain untouched. Taxpayers with income between Rs 50 lakh and Rs 1 crore continue to pay 10% surcharge, between Rs 1 crore and Rs 2 crore pay 15%, between Rs 2 crore and Rs 5 crore pay 25% and those with income over Rs 5 crore pay 37%. So those earning just below these limits will not benefit if they forego the exemptions and move to the new regime. Given below is the math to explain how the new regime will affect tax outgo of taxpayers at different income levels.
Income: Rs 15 lakh
Income: Rs 30 lakh
Income: Rs 60 lakh