67-Year-Old Retiree in 30% Tax Bracket: Old vs. New Tax Regime?

Ans: Person having taxable income around 20-30 lacs and take deduction less than 4.25 lacs from housing loan/80C/80D, can opt for new tax regime as new slab rate is likely to be beneficial as per budget proposed for FY 2023-24

In future, you can calculate the tax from following link :

https://incometaxindia.gov.in/Pages/tools/115bac-tax-calculator-finance-bill-2023.aspx

Ans: Hello;

As per a thumb rule, if your annual total deduction is above 3.7 L in a financial year then old regime is better for you.

Best wishes;

Ans: Hello;

It depends on your total income and amount of deductions you claim in a financial year.

Best wishes;

Ans: The tax regime you choose impacts your tax savings and investments.

Both the old and new regimes have their benefits. The best option depends on your financial situation.

Let’s analyse both in detail.

Basic Comparison Between Old and New Regime
The old regime allows deductions under various sections.

The new regime offers lower tax rates but removes most deductions.

If you claim multiple deductions, the old regime may be better.

If you prefer a simpler approach, the new regime may suit you.

Impact of Your Investments on Tax Savings
You invest in NPS, which qualifies for deductions under 80CCD(1B).

You also have medical health insurance, which is deductible under 80D.

Critical illness insurance also gives tax benefits under 80D.

These deductions can significantly reduce taxable income in the old regime.

Tax Slabs and Rates Consideration
The old regime has higher tax rates but offers multiple deductions.

The new regime has lower tax rates but removes most exemptions.

At high income levels, deductions play a crucial role in tax planning.

How Salary Structure Affects the Choice
A salary of Rs. 2.7 crore includes basic pay, allowances, and incentives.

If your salary has HRA, it is exempt under the old regime.

If you receive LTA, it is also exempt under the old regime.

If your salary has more taxable components, the new regime may work.

Deductions Available in the Old Regime
Standard deduction of Rs. 50,000 for salaried individuals.

NPS investment deduction under 80CCD(1B) up to Rs. 50,000.

Health insurance and critical illness premium deduction under 80D.

HRA, LTA, and home loan interest deductions (if applicable).

Deductions under 80G for donations.

New Regime – When It Can Be Beneficial
If you do not claim many deductions, the new regime may reduce tax burden.

If you prefer a simpler tax calculation process.

If your salary has fewer tax-free allowances.

Which Regime to Choose?
If your deductions exceed Rs. 5-6 lakh, the old regime is better.

If you have no home loan and fewer deductions, consider the new regime.

Compare the tax outflow under both regimes before making a decision.

Final Insights
The best option depends on how much tax you can save.

If you claim multiple deductions, the old regime offers better benefits.

If you prefer lower tax rates with fewer complications, the new regime works.

Review your total deductions and taxable income before finalising your choice.

Consult a Certified Financial Planner for a customised tax strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment