The government is trying to simplify the income tax rules. With this aim, the government had announced a new income tax regime in 2020.
The budget for the financial year 2025-26 has just been presented. In this budget, the central government has given a big relief to the middle class. Finance Minister Nirmala Sitharaman announced to simplify the income tax rules. She has also reduced the tax. Now, there is no need to pay tax on income up to Rs 12 lakh per year. The working class does not have to pay tax on an amount up to Rs 12 lakh 75 thousand. Apart from this, changes have also been made in the income tax slabs. Therefore, those with high income will now have to pay less tax than before. Of course, all these benefits will be available only to those who accept the new income tax regime, this is the condition.
Tax experts say that the announcement made by the Finance Minister on February 1 will make a big difference. According to the information available to the government, the number of individual taxpayers using the new income tax regime has now increased to 72 percent. This is the result of the announcements made in the Union Budgets in the last few years regarding the new tax regime. The announcement made by the Finance Minister this time will definitely increase the number of taxpayers coming under the new regime. That is what the government wants.
The government is trying to simplify the income tax rules. With this aim, the government had announced a new income tax regime in 2020. Initially, taxpayers did not take much interest in it; however, in the last one or two years, individual taxpayers have taken interest in it. Finance Minister Nirmala Sitharaman said that she will present the new Income Tax Act in Parliament next week. Through this act, the government will simplify the tax rules.
Benefits of Old Tax Regime
The biggest attraction of the old tax regime is the deduction available. It provides four types of tax benefits. Under Section 80C, a deduction of up to Rs 1.5 lakh is available in a year. Most individual taxpayers use this deduction. Under Section 80D, a deduction is available on health policies. A person below the age of 60 can claim a deduction of up to Rs 25,000. A person above the age of 60 can claim a deduction of up to Rs 50,000. The third tax benefit is available on home loans. Under Section 24B, a tax benefit of up to Rs 2 lakh is available on home loan interest.
Tax benefit is also available on the principal amount of home loan. It is available under Section 80C. There are about a dozen investment options under 80C. These include schemes like PPF, ELSS, LIC, Sukanya Samriddhi. A large number of citizens invest in them. HRA exemption is also available to employed persons in the old income tax regime. Therefore, the old regime is more beneficial for many taxpayers. Tax experts say that after the change to the new regime on February 1, the old regime is no longer beneficial for those who have not taken a home loan.