Old vs New Tax Regime? Use this simple calculator from the income tax department to decide what works for you

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If you are still confused about how to choose between the old and new tax regimes, then the Income Tax Department has launched a tax calculator to help you make the right decision. You just need to fill in relevant details such as gross income, deductions and exemptions out tax liability and the calculator will determine which option works better for you. 

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Here are the steps to calculate and compare tax liability under new and old tax regimes:

Step 1: Click on the following link: 

Step 2: Fill in relevant details such as taxpayers and residential status 

Step 3: Enter gross salary (after deducting allowances exempted under both regimes such as tour and conveyance allowance). 

Step 4: Give details of salary amount which is exempted (which is not allowed in the new regime) such as HRA under section 10 (13A); income other than salary 

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Step 5: If you have taken a home loan put details of interest paid on the home loan on Self Occupied House Property

Step 6: Give details of other deductions allowed under both regimes such as deduction to individuals enrolled in Agnipath Scheme u/s 80CCH(2), 10% of salary to the employer’s payments to the NPS u/s 80CCD(2)   family pension deduction under section 57(iia), 80JJA, etc.

Step 7: Enter deductions/exemptions not eligible in the new tax regime such as 80C, health insurance u/s 80D. 

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Step 8: The tax calculator will show you tax calculations under both regimes and what option works for you.

While you decide on what regime to choose, remember that there is no tax on income upto Rs 7lakh and less under the new regime. In addition, now a standard deduction of Rs 50,000 is also available in the new regime. Moreover, calculations show if Rs1.5 lakh can be claimed as a deduction under 80C along with HRA, and other deductions old tax regime is likely to work better for you. 

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Last but not least if you do not have any tax-saving investments or expenditures, then a new tax scheme is likely to be better to cash in on the low tax rates.