My annual salary is upwards of 35 lakhs. I pay rent and have invested in Life and Medical insurances. Which tax regime should i choose? Is there a place where i can simulate options and then select?

Ans: Person earning income from salary, repaying housing loan interest of Rs.200000, taking deduction of 1.5 lacs and mediclaim of 12000; likely save tax under old tax regime

Ans: Dear Shyam,

Thank you for reaching out with your query. Based on the information provided, your annual income is INR 32 lakh, you invest INR 50,000 in NPS, and have a health insurance premium of INR 30,000 per year. To determine the most suitable tax regime for you, we'll need to compare your tax liability under both the New and Old Tax Regimes, considering the deductions you're eligible for.

Under the Old Tax Regime, you can claim deductions for your NPS investment (Section 80CCD) and health insurance premium (Section 80D). Your taxable income would be INR 31,20,000 (32,00,000 - 50,000 - 30,000). The tax liability would be:

Nil on the first INR 2.5 lakh
5% on the next INR 2.5 lakh (INR 12,500)
20% on the next INR 2.5 lakh (INR 50,000)
20% on the next INR 2.5 lakh (INR 50,000)
30% on the remaining INR 21.2 lakh (INR 6,36,000)
Total tax liability under the Old Regime: INR 7,48,500

Under the New Tax Regime, you won't be able to claim deductions for your NPS investment and health insurance premium. Your taxable income would be INR 32,00,000. The tax liability would be:

Nil on the first INR 3 lakh
5% on the next INR 3 lakh (INR 15,000)
10% on the next INR 3 lakh (INR 30,000)
15% on the next INR 3 lakh (INR 45,000)
20% on the next INR 3 lakh (INR 60,000)
30% on the remaining INR 17 lakh (INR 5,10,000)
Total tax liability under the New Regime: INR 6,60,000

Comparing the tax liabilities under both regimes, you would save INR 88,500 by opting for the New Tax Regime. It's important to note that you will have to forgo the deductions mentioned, but in your case, the savings in tax outweigh the deductions. Therefore, I would recommend opting for the New Tax Regime for this financial year.

Please note that this is just an analysis based on the information you provided, and it's always a good idea to consult a tax professional for personalized advice.

I hope this helps!

Best regards,

Ans: New scheme is likely to be beneficial for you. Interest on housing loan is allowed to adjust against income from salary under old scheme upto Rs.2 lacs p.a. Further, principal repayment of housing loan and tax saver MF are allowed to deduct u/s 80C upto Rs.1.5 lacs p.a.

You compare tax liability under both regime at https://incometaxindia.gov.in/Pages/tools/115bac-tax-calculator-finance-bill-2023.aspx

Ans: New scheme is likely to beneficial for FY 2023-24.

You can compare the tax liability under both regime at https://incometaxindia.gov.in/Pages/tools/115bac-tax-calculator-finance-bill-2023.aspx