Income Tax Department

​​​​​​Tax Calculator: Old vs. New Regime

What is the new tax regime?

The Finance Act, 2020 introduced the new tax regime under Section 115BAC for individuals and HUFs, offering lower tax rates contingent upon certain conditions, including the forfeiture of specific exemptions and deductions. From the Assessment Year 2024-25 onwards, the Finance Act, 2023 has expanded the scope of this regime to include AOP, BOI, and AJP, making it the default tax regime for the taxpayers.

What is the difference between the old tax regime and new tax regime?

If a taxpayer opts for the new tax regime as per Section 115BAC, they are required to forgo exemptions and deductions while computing their total income. This means that if a person is currently availing of exemptions or deductions under the normal tax regime, they may not save as much tax or may even end up paying more tax under the new tax regime if the amount of exemptions and deductions they are currently receiving is substantial.

How to opt for old tax regime?

Where an assessee wants to opt for the old tax regime, Section 115BAC provides an option to the eligible assessee to opt out of the new tax regime in a prescribed manner.

Should i opt for new tax regime?

The decision to opt for the new tax regime will depend on the amount of exemptions and deductions available to the assessee. For example, if an individual has no deductions available to them under the old tax regime, it would always be more beneficial for them to opt for the new tax regime.

On the other hand, if an individual is availing of deductions under Section 80C, Section 80D, and the interest on housing loan under Section 24, it would be beneficial for them to opt for the old tax regime.

Medical Facility

Treatment of medical facility provided by the employer to employee is as follows:

Medical facility In India

Note: Fixed medical allowance given by employer to employee is fully chargeable to tax.

Medical facility outside India

Expenditure incurred by the employer on medical treatment of employee is taxable subject to the conditions given below:-

​​Children education and hostel allowance

Children education allowance (by whatever name called) is exempt upto Rs. 100/- per month per child up to a maximum of two children.

Further, any allowance granted to an employee to meet the hostel expenditure on his child (whatever name called) is exempt upto Rs. 300/- per month per child up to a maximum of two children.

​​Profits and Gains of the profession on presumptive basis ​​u/s 44ADA​

​​Section 44ADA is a presumptive taxation scheme. It is applicable to a resident Individual or Partnership Firm (other than LLP) engaged in the specified profession. This scheme can be opted only if the gross receipts of the eligible assessee from the specified profession during the relevant previous year do not exceed Rs. 50 lakhs. However, the limit of Rs. 50 lakhs shall be increased to Rs. 75 lakhs if the amount or aggregate of the amount of cash received during the previous year does not exceed 5% of the total gross receipts of such year. The presumptive income shall be 50% of the total gross receipts of the year from such profession.

An assessee opting for this scheme shall be exempted from maintenance of books of account related to such profession as required under ​​Section 44AA and get them audited as required under Section 44AB​. Further, unlike other taxpayers where advance tax is payable in four instalments, the assessee opting for this scheme can pay 100% of advance tax in a single instalment on or before March 15 of the previous year.

The following professions are specified for this scheme:

1. Legal
2. Medical
3. Engineering
4. Architectural
5. Technical Consultancy
6. Interior decoration
7. Film artist
8. Authorized Representative
9. Accountancy Profession
10. Company secretary
11. Information Technology​
    

Alternate Minimum Tax (AMT)

Alternate Minimum Tax (AMT) is payable by a non-company assessee whose regular tax on total income is less than 18.5% (or 9% in case of IFSC unit or 15% in case of co-operative society) of 'Adjusted total income'. 'Adjusted total income' is computed by adding to the taxable income various deductions claimed by the assessee.

However, an individual or a Hindu undivided family (HUF) or an association of persons (AOP) or a body of individuals (BOI), or an artificial juridical person (AJP) is not liable to pay AMT if adjusted total income does not exceed Rs 20 lakhs. Further, the provisions of AMT don't apply in the case of an assessee who opts for an alternative tax regime of Section 115BAC, 115BAD or 115BAE ​.

The tax liability as per the provisions of AMT shall be the higher of the following:

(a)   Tax payable on total income computed as per normal provisions of the Act;

(b)   Tax payable on the adjusted total income computed at the rate of 18.5% or 9% or `15%, as the case may be.

The tax computed as per normal provision or as per AMT shall be further increased by the applicable surcharge and health & education cess before comparing the higher of the two. The excess tax liability arising due to AMT can be claimed as a credit in subsequent years.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (MAT) is payable by companies whose tax on total income is less than 15% (or 9% in case of IFSC unit) of 'book profit'. 'Book profit' is computed by making specified additions and deletions to the profits determined as per the statement of profits of the company. MAT is payable even if the total income of a company is nil or it has tax losses. The excess tax liability arising due to MAT can be claimed as a credit in subsequent years.

The tax liability under MAT shall be higher of the following:

(c)   Tax on the total income of the company computed at the applicable rate of 25% or 30%or 40% or a special tax rate

(d)  Tax on book profits computed at the rate of 15% or 9%, as the case may be.

The tax computed as per normal provision or as per MAT shall be further increased by the applicable surcharge and health & education cess before comparing the higher of the two. It is to be noted that the provisions of MAT don't apply in the case of an assessee who opts for an alternative tax regime of Section 115BAA and Section 115BAB.​