How to compare your tax liability in old and new tax regimes

• The Income Tax Department has rolled out a tax calculator.
• The tool helps you compare the tax liability between the old and new regimes.
• Here’s how you can use the income tax calculator to determine which tax regime you should opt for.

Finance Minister Nirmala Sitharaman, during the 2023-24 Budget, announced that the new tax regime had been made the default tax regime, with taxpayers having the option to opt for the old tax regime.

Both tax regimes offer different benefits, and it is important to opt for the regime that offers the most benefit to you.

To help taxpayers decide which tax regime they should opt for, the Income Tax Department has rolled out a tax calculator, which showcases the tax liability in the two tax regimes to help you decide which regime is better for you.

Here’s how to use the income tax calculator to compare the tax liability in the old and new regimes.

How to compare your tax liability in old and new tax regimes

• To begin, go to the income tax calculator on the Income Tax website.
• Then, select if you are an individual, Hindu Undivided Family (HUF) or association of persons (AOP) / body of individuals (BOI) / artificial juridical person (AJP) from the drop-down menu.
• Then, select your gender and residential status.
• Now, enter your gross salary after deducting allowances exempted under both new and old tax regimes.
• Now, enter deductions that are allowed only in the old tax regime, except the standard deduction.
• Now, enter your other incomes, such as income other than salary, interest on self-occupied house property, and more.
• Then, enter deductions such as 80CCH(2), 80CCD(2), 80JJAA and family pension which are allowed under both regimes.

You can also enter other eligible deductions in the old tax regime.

Once you have entered all the details, the calculator will show you the tax liability in both regimes, and the difference between the tax liabilities.

You can see the difference in the tax amount and the tax saving in the old or the new regime and decide which regime you should opt for.

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