A reader says, “Thank you for the fantastic new tax regime vs old tax regime calculator for FY 2023-2024 (AY 2024-2025). It is really easy and useful. Currently, the new regime is beneficial for me. Can I switch back to the old tax regime if I wish to buy a house in future?”
The old tax regime could well be sunset in future. Last AY, we had a choice between the two regimes. The new tax regime is the default this AY. As per current rules, if you choose the new tax regime, you can switch to the old regime anytime if you are salaried with no business income.
If you have a business income, you can switch back to the old regime once but then cannot move to the new regime again. Salaried people or HUF with no business income (those filing ITR1 and 2) can choose between the old and new regime (section 115BAC) yearly.
Others (with business income) can choose to be in the old regime for as long as they want, but once they shift to the new tax slab, they will be allowed to withdraw only once. If they switch back to the old regime from the new one, they cannot return to the new one unless their business income is zero.
The new tax regime is an excellent choice for all young earners. There is no need to buy products to “save tax”. This is how most people start their investment journey and clutter their portfolios. So we recommend avoiding that and opting for the new tax regime. Use an equity index fund and EPF/NPS (100% debt) to start without worrying about saving tax and let the new tax regime lower your tax burden naturally.
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