Want to compare Old & New Regime income tax? Here's an e-calculator Govt has launched

Want to compare Old & New Regime income tax? Here's an e-calculator Govt has launched

credit: third party image reference

On Thursday, the Income Tax Department launched an e-calculator for individuals to estimate and compare their tax liability under the new tax slabs as compared with the current regime.

The calculator for resident individuals (the fiscal year 2020-21) has been hosted on the department's official e-filing website, with a comparative table to compare taxes in the old and new tax regime.

The calculator, which was launched earlier in the day, was updated in the evening by the department to make it "user-friendlier." It largely yields three broad outcomes for the user based on the type of individual financial data fed into it, a senior official said.

It will either tell the user about the tax benefit by the new scheme (as proposed in the Union Budget), the tax benefit by the existing or old scheme and, lastly, if the user's tax outflow is the same in both the old and the new scheme.

This will help an individual make an informed decision to opt either for the tax slab while filing their next year's income tax return (ITR).

credit: third party image reference

Taxpayers in three categories of ordinary citizens (under 60 years of age), senior citizens (60-79 years of age) and senior citizens (above 79 years of age) may punch their estimated annual income, total eligible deductions and exemptions to see what their total taxable income will be if they continue under the old regime or opt for a new one that will not allow any deductions or exemptions.

Once fed with data, the calculator promptly informs the user of the actual amount of money that can be saved by choosing either of the two regimes.

"This calculation is only meant to provide a basic idea of the expected effect of the new provisions. Refer to the regulations on income tax for the specific requirements and qualifications," said a warning on the page.

As announced by Union Finance Minister Nirmala Sitharaman in her Budget speech on February 1, 5 percent tax is levied on an annual income of Rs 2.5 lakh and Rs 5 lakh in the existing personal income tax system. The tax rate for each addition of Rs 2.5 lakh rises to 10 percent, 15 percent, 20 percent, and 25 percent. An income tax of 30 percent over Rs 15 lakh is charged.

credit: third party image reference

The old or new income tax rate system requires a standard deduction of Rs 50,000 and Rs 1.5 lakh expenditure in saving schemes with a cost of 5%, 10% or 30% tax depending on different income levels.