By Admin 
Income tax: The old tax system has brought a new difficulty in front of taxpayers who switch into the new tax system as the exemption given under sections 80C, 80D and 80CCD (1) has been abolished under it. Now the question comes whether those who choose New Tax Reseam should invest in Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) and National Pension System (NPS)? Let’s know-
According to a Business Standard report, SR Patnaik, partner (tax head) of Siril Amarchand Mangaldas, said, “Salary and non-business-income taxpayers have the option to choose between new and old tax arrangements every year, so they can choose one of the two without restricting every year.
The income tax slabs under the new tax system implemented from 1 April 2025 are as follows:
- No tax will have to be paid on income up to Rs 4 lakh.
- 5 percent tax will have to be paid on income ranging from Rs 4 lakh to Rs 8 lakh.
- 10 percent tax will have to be paid on income ranging from Rs 8 lakh to Rs 12 lakh.
- The tax amount on earnings ranging from Rs 12 lakh to Rs 16 lakh is 15 percent.
- 20 percent tax will have to be paid on income ranging from Rs 16 lakh to Rs 20 lakh.
- 25 percent tax will have to be paid on income ranging from Rs 20 lakh to Rs 24 lakh.
- 30 percent will have to be paid on earnings of more than Rs 24 lakh.
Tax slab under old tax system
- No tax on earnings up to Rs 2,50,000.
- 5 percent tax will have to be paid on income ranging from Rs 2,50,001 to Rs 5,00,000.
- Tax amount on earnings ranging from Rs 5,00,001 to Rs 10,00,000.
- 30 percent tax will have to be paid on income of more than Rs 10,00,000.
Cuts available under old tax system
Under the old tax system, taxpayers get the benefit of various cuttings and discounts. You can claim a deduction of up to Rs 1.5 lakh on PPF, ELSS and LIC premiums under Section 80C, 80CCD (1), 80CCD (1), 80CCD (2), 80CCD (1B), 80G, 80TTA, 80TTB. Under Section 80D, you can claim deduction on the premium paid for health insurance. Under Section 24 (b), you can claim tax exemption on interest up to Rs 2,00,000 on home loans. Apart from these, there are some other options to save tax like HRA and LTA.
Apart from tax exemption, many benefits of investment
Talking to Business Standard, Cleartax’s tax expert Shefali Mundra says, “Not only one should invest to get a discount on tax as it is aimed at making a financial secure and getting a financial freedom in the long term. Although in the new tax system, tax exemption on investments like PPF, SSY and NPS has been completely abolished, but through them your regular saving remains, benefits on retirement and can file ricks-free returns. ‘
Mundra further says, “Tax planning should be a part of your financial planning. The strategy of investment should be such that it is not only based on tax exemption, but should also focus on Financial Freedom, which has long term results.
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