New Tax Regime VS Old Tax Regime : Deductions available in new And Old tax regime 2020

New vs old tax regime

Deductions available in new and old tax regime

Govt.has proposed new tax regime in budget 2020.And we will discuss the deductions available in new and old tax regime.Govt. has abolished 70 deductions.

And salaried class has been badly effected by new tax regime.

The common tax exemptions like HRA under section 10,deductions like standard deduction of ₹ 50,000,section 80c,house rent allowance under 24 sections etc.,all have been withdrawn.

 Deductions Available Under New tax regime

There are very few deductions and exemptions that are still available.let us discuss them one by one :

  1. Section 10(6)- Remuneration received as an official of an Embassy, High Commission etc.
  2. Section 10(7)- Allowances or perquisites paid o outside India by the Government to an Indian citizen.
  3. Section 10(10)- Death–cum-retirement gratuity received.
  4. Section 10(10A)- Commuted value of pension received.
  5. Section 10(10AA)- Earned leave encashment on retirement.
  6. Section 10(10B)(i)- Retrenchment Compensation received in respect of schemes not approved.
  7.  Section 10(10B)(ii)- Retrenchment Compensation received in respect of approved scheme.
  8.  Section 10(10C)- Amount received or receivable on voluntary retirement or termination of service.
  9.  Section 10(10CC)- Tax paid by employer on non-monetary perquisite.
  10. Section 24- Interest on Home Loan on rented out properties only.
  11.  Section 80CCD(2)- Contribution of employer to pension scheme of Central Government (NPS and EPF)

Also read : Income tax slab rates for Govt. Employees FY 2020-21

Deductions Not Available Under New tax regime

In budget 2020 govt. has rolled back approximately 70 deductions and exemptions.

House rent allowance: house rent allowance is not available under new tax regime.

Similarly all exemptions except discussed above,will not be claimable.

All Deductions  under chapter VI(A) are unavailable under new tax regime.

All in all, major deductions like sections 80C,standard deduction,section 16(tax on employment etc.),Home loan interest and principal amount under 24 section.

Similarly sections 80CCC,80CCD(1),80CCD(1B),80E,80EE,80D,80DD,80G,80GG,80U,80TTA,80TTB,80DDB all have been rolled back.

New tax rates under new tax regime

Tax slab ratesTax Rate
0-250,000Nil
250,001 to 5,00,0005%
5,00,001 to 750,00010%
750,001 to 10,00,00015%
10,00,001 to 12,50,00020%
12,50,001 to 15,00,00025%
Above 15,00,00030%

Comparison of old tax and new tax regime

Taxable IncomeNew Tax RateOld Tax Rates
0-250,000NilNil
250,001-5,00,0005%5%
5,00,001-7,50,00010%20%
750,001-10,00,00015%20%
10,00,001-12,50,00020%30%
12,50,001-15,00,00025%30%
Above 30%30%30%

Which tax regime is best ?

If you are salaried employee,frankly writing,you should go with old tax regime.

And similarly,if you don’t have any deduction and exemption in past and now,then new tax regime could be the best option for you.

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

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