Confused about which tax regime is better for salaried individuals in FY 2023-24? Understand the provisions of the new tax regime, eligibility, and FAQs here.

Before knowing which tax regime is better old or new, Let’s understand first the new tax regime Provisions.

The new regime of taxation has been introduced by the Finance Act, 2020 by insertion of a new Section 115BAC. Which has been amended by finance act 2023 .

The new Tax regime (Section 115 BAC) is applicable to;

  • Individual, HUF Both resident or Non Resident
  • association of persons [other than a co- operative society], or
  • body of individuals, whether incorporated or not, or
  • an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2

Tax regime better for salaried Person

And, If assessee opts for New tax Regime , the total income shall be computed without any exemption or deduction under the provisions of:-

  • Sec 10(5) [ Leave Travel Concession]
  • Sec 10(13A) [House Rent Allowance]
  • Sec 10(14) [special allowances
  • Sec 24(b) [Interest on borrowing in respect of Self occupied property] (Rs 200000)
  • Losses From House Property cannot be set off against salary or any other head of income.
  • Sec 80 C (Rs 150000)
  • Sec 80 CCD(1) NPS deposited by Self
  • Sec 80 D Medical Insurance Premium
  • Sec 80 G Donation
  • Any other Deduction of chapter VIA except 80 CCD(2)

but, include following deduction and exemption

  • Standard Deduction Rs 50000
  • Professional Tax deducted by employer where applicable in state
  • Family pension Rs 5000
  • Agniveer corpus Fund and
  • Transport allowance granted to Divyang Employees
  • Conveyance Allowance
  • Any allowance to meet the cost of travel or on transfer Allowance to meet the ordinarily daily charges incurred by employee
  • Investment as per Section 80 CCD (2)- If employer deduct and invest towards to NPS (Maximum Deduction allow here is If central Govt and State govt employee 14 % of their salary ( Basic+ DA) any other employee 10 % of their salary ( Basic+ DA) )

No tax till Rs 7 lakhs of Taxable income

Amount of Rebate under section 87A is Rs 7 lakhs under new Tax regime. So, No Tax required to be paid till Rs 7 lakhs taxable income.

Slab Rate of New tax Regime is ;

Total Income (Rs) Rate
Up to 3,00,000 Nil
From 3,00,001 to 6,00,000 5%
From 6,00,001 to 9,00,000 10%
From 9,00,001 to 12,00,000 15%
From 12,00,001 to 15,00,000 20%
 Above 15,00,000 30%

FAQ on Which Tax regime better for salaried Person for FY 2023-24

Q1. Which Option is better for salaried Person for FY 23-24

Ans: Any of the Tax regime is better for salaried person till Annual salary (CTC) of Rs 10 lakhs so can opt any new tax regime both are better. However, after Rs 10 Lakh Annual Salary (CTC) Old tax regime is only better because of allowance and deduction available under this regime.

Note: While you are making selection with employer about tax regime and you’re looking for your annual salary may increase than RS 10 Lakhs this year either with current employment or due to change of new employment then in my view it is preferrable to opt old tax regime then your TDS does not deduct higher

Q2. When will a salaried employee Opt the option of new or old tax regime? 

Ans : An employee have to opt the tax regime option with your employer in starting of the FY 23-24. However, this option decision becomes Final when a person opt the Option at the time of their ITR filing.

So, anyone can change the tax regime till Filling of ITR for FY 23-24 even if they opted with employer.

Q3. Can the option once opt it will not change in next year?

Ans: In the case of Salaried Person option can be change every year

However, In case Individual/HUF having income from business/profession and once If opts new tax regime then he/she is bound by the section 115BAC for lifetime.

Also, He/ She has to file Form 10-IE for exercising this option of new tax regime

However To Salaried Person No Form is required to fill to exercise the option only have to tick mark in option given into ITR’s

Q4. Can the option change in same year once ITR has been filed for that year?

Ans: Yes, an assessee can change the option in same year with revised their return.

So, for the same year this option is available till the last due date of Revised Return

Disclaimer: The views expressed in this article are the personal views of the author. Neither the views nor the analysis constitute a legal opinion and are not intended to be advice

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3 Comments

  1. Ritchie says:

    Hi Sir,
    I’m a banker by profession and my annual salary will be approx 13-14 lakh in 2023-24.
    I have investment approx 1.80-2 lakh under 80C
    Which tax regime would be better for me??
    Thanking you in advance..

  2. CA. Lakshmanan M says:

    In addition the marginal relief is given to for those who follow the New Tax Regime, if the income marginally is more than Rs. 7 Lakhs, wherein the tax is restricted to the income that exceeds Rs. 7 lakhs, which is not available for those who follows Old Tax Regime wherein the tax payable is more than the income that exceeds limit of Rs. 5 lakhs up to the taxable income of Rs.5,15,620/-

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