Last Updated on February 4, 2023 at 8:21 am
Budget 2023 has made significant changes to the new tax regime. Although the old regime is still valid, the new regime will now be the default regime, and taxpayers must opt for the old regime if they wish to. Here is a free calculator to find out if you should switch to the new tax regime.
There are three major changes to the new regime and no changes to the old regime.
- The tax slabs have been changed. We have covered this here: Revised New Tax Regime in Budget 2023 Comparison Table.
- A standard deduction of Rs. 50,000 has been introduced only for salaried taxpayers.
- A tax rebate has been introduced. In the old regime, taxable income up Rs. 5 lakhs was effectively tax-free due to this rebate. In the new regime, taxable income up to Rs. 7 lakhs will be effectively tax-free after this rebate.
So should taxpayers now choose the new tax regime? Will it be more beneficial? If your HRA is high and you are also servicing a home loan with tax benefits, possibly the old regime is still good for you. Once the loan ends, you can opt for the new regime. Section 80C benefits alone may not be enough now to stick to the old regime!
While that is a crude thumbrule, a proper calculation is better. You can use this free excel sheet to compare the tax payable for your circumstances. There are three outputs: taxation in the old regime, taxation in the new regime before budget 2023 and valid up to March 2023 and taxation in the new regime from 1st April 2023 as per Budget 2023.
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New Tax Regime vs Old Tax Regime Calculator
This is a screenshot. The tool has been modified from an earlier version provided by reader Vinay.
Latest (after Budget 2023): Old tax regime vs new tax regime (up to march 31st, 2023) vs new tax regime (from 1st April 2023) calculator. (please let me know if there are any bugs).
Update: Reader Balasubrahmanyan has modified the old tax regime vs the new tax regime tool “to include a few deductions, especially employer contribution to NPS.
Also, sections to calculate surcharge and marginal relief are added”.
Use if your income is higher than 50L only: Old tax regime vs new tax regime (up to march 31st, 2023) vs new tax regime (from 1st April 2023) calculator (please let me know if there are any bugs).
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