The document discusses recent changes in personal income tax regimes in India, highlighting the differences between the old and new systems. It outlines tax rates, available exemptions, and the complexities individuals may face when choosing between the two options, especially for those with and without business income. The document emphasizes the importance of systematic planning for savings and investments regardless of the chosen tax regime.

1. A Modern Communications Company
RECENT CHANGES IN PERSONAL INCOME TAX
01
Know more from our industry expert
CA Sneha Halder
Head- Direct Taxes
Greenvissage Business Consulting

2. 02
It has high tax rates
It has less slabs
It has lot of options to reduce
taxes – exemptions and
deductions available
It includes compulsory savings
to reduce the taxes
Old Regime
It has low tax rates
It has more slabs
There is no way to reduce taxes – forego
of exemptions and deductions
The dilemma of whether and how much
to save / invest as no tax benefits arises
There is a distinction made between
individuals with and without business
income
New Regime
UNDERSTAND THE TWO REGIMES

3. OPTIONS AVAILABLE UNDER THE NEW SYSTEM
02
This option is to be exercised by an individual along with return of
income. For individuals having no business income, this option can be
exercised every year. One can freely opt in and out of the scheme annually
and tax rates will apply accordingly.
If the return is late for filing, the normal tax rates as per old scheme will
apply.

4. 02
An individual with business income needs to file for the return of income of
financial year 2020-21 and it will continue to apply to all subsequent years.
The option can be withdrawn only once and thereafter cannot be exercised
again till the time the individual continues to have business income.

5. LIST OF EXEMPTIONS AND DEDUCTIONS TO FOREGO
02
Interest on Self occupied property
Exemption of House Rent Allowance, Leave Travel Concession & some
exemptions under section 10(14)
Standard deduction of Rs 50,000, entertainment allowance, profession tax
(PT) is not available

6. 02
Scientific research weighted deduction for payments to research
association, company doing scientific research, university, college or other
institution, social science and statistical research, payment to National
laboratory/ Indian Institute of Technology. There will be additional
depreciation under section 32 (1)(iia)
Set off of losses or depreciation brought forward will not be allowed if these
relate to any of the mentioned deductions/ exemptions

7. 02
Deduction under 80CCD(2) i.e. employer contribution in National Pension
Scheme and 80JJAA i.e. new employment generation deduction is available
Loss from house property will not be set off against the income under any
other head
Allowance for income of minor as contained in section 10(32)

8. NEW TAX REGIME OR OLD – WHAT SHOULD
YOU PICK?
02
There is no single answer to this. The first reaction could be that the new
system looks better. However, the answer lies in the details.
While figuring out what option to go for might look complicated. If it is
approached in a systematic way, it is not difficult to figure out.
Also, whichever regime is selected, it should not change the decision on
savings and investments neither should the required insurances be delayed.

9. EXEMPTIONS AND DEDUCTIONS STILL AVAILABLE
02
On employer's contribution to EPF, NPS over Rs 7.5 lakh
On the amount received on maturity of life insurance
On the interest and maturity amount of PPF
If the payment under Sukanya Samriddhi Yojana exceeds Rs.1.5 lakh
On the lump sum maturity amount of NPS (60% of corpus)
On gifts from the employer upto Rs 5,000

10. 02
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