New tax regime | How to save income tax in FY24

[Music] while the new tax regime was introduced in fi21 Union budget for f24 revived it the tax Labs were revised the rebate under Section 87a was extended up to 7 lakh rupees of income the benefit of standard deduction was introduced in the new tax regime as well and above all the new tax regime became the default option now under the new tax regime there is no tax if your annual income is up to 7 and a half lakh there is even a marginal relief for income from 7.5 lakh to 7.78 lakh so for this income range the tax will be the amount exceeding 7 half lakhs not the amount as per the tax laabs all these motivated many of us to off for the new regime but there was a compromise too we had to give up almost all the deductions and exemptions we enjoyed in the old tax structure of course course that made things simpler and straightforward and help us get rid of piles of documentation not to forget it gave us the flexibility to decide where we should put our money to work but the desire to save some tax is very much there isn't it and why not it's our hard ear money so the question that many of us who opted for new tax regime have is this is it possible to save taxes in the new tax regime hello and welcome to Ed money's YouTube channel today we will discuss how you can save tax if you have opted for the new tax regime but before we begin a quick reminder you're watching this video on ET money's English Channel CH videos and if you are or know somebody who wants to understand the basics of Finance we have a channel called five minute Finance where we explain the basics in under 5 minutes do check them out all right let's get back to our video well honestly there aren't many Avenues in the new tax regime and they are much fewer than those in the old tax regime still it is worthwhile to know them so that you can use them if possible so let's begin with the tax saving options in the new regime do watch this video Until the End so that you don't miss out on a worthy option that can save you thousands of rupees most employees have PF deductions these include 12% of the basic salary contributed by the employee with another 12% contributed by the employer for example if the basic salary is 20,000 per month 12% of it that is 2400 is contributed by the employee and another 2400 by the employer now there is no tax on the 12% employer contribution both in the new and old tax regimes up to the contribution of 7 and a half lakh rupees in a financial year in other words while the employer's contribution is part of your CTC it isn't part of your taxable income whether it's old or new regime this aspect Remains the Same but note that the employees contribution of 12% is part of the taxable income it is tax exempt under Section 8C in the old tax regime but not in the new one similarly an employees NPS contributions under Section 8ccd 2 of up to 10% of basic salary are tax exempt both in new and old tax regime subject to the upper limit of 7.2 lakh rupees in a financial year so if the basic salary is 20,000 per month that equals to 2,000 per month or 24,000 for the year you can ask your HR to off for the employers and contribution under Section 80 ccd2 however your employer may not allow it at the end of the financial year so you can get started from the next financial year let's talk about the next tax saving Revenue now and this is an important [Music] one under section 24b of the it act interest on the home loan taken for a property that has been let out is deductible from the rental income this feature is available both in the old and the new tax regimes so this deduction effectively reduces the net rental income thus reducing the tax outgo let me explain this in detail the home loan Ami you pay has two components the principal and the interest the principal repayment is tax deductible up to 1 and a half lakh rupees in a financial year under Section 80c in the old tax regime now this deduction is not available in the new tax regime the second component which is the interest is tax dedu able depending upon the end use of the property so let's first talk about the self-occupied property if the property is self-occupied and you have received its possession you can claim a deduction on the interest paid up to 2 lakh rupees in a financial year but this is Possible only in the old tax regime and not in the new one so if your house is self-occupied you can't Avail any tax deduction under the new regime all right next comes a let out property if you finance your home purchase with a loan and you have let it out you can claim a deduction for the interest paid under both old and new tax regime in other words if you're a landlord who has bought a house on loan you can Avail of Interest reduction under both old and new tax regimes the interest paid will be adjusted against the rental income which will lower the net rental income on which you need to pay tax now apart from the interest one can also claim the standard deduction of 30% of the net annual value of the property this net annual value is derived after deducting Municipal Taxes from the gross annual value let's understand this with an example say you have a property that you purchase with a home loan the interest component of this loan is 2 lakh rupees for fi 24 and you gave this property out on rent at 25,000 per month so gross annual income from the property is 3 lakh after reducing the Municipal Taxes we get the net asset value we have assumed the taxes to be 10,000 rupees for f24 the deduction of 30% is deducted from this net asset value after that the interest on the home loan is deducted that leaves it with just 3,000 rupees so only 3,000 is subject to tax now after adjusting the interest and standard deduction if there is a loss you can't set off this loss against other incomes under the new tax regime neither you can carry it forward in effect you aren't compensated for a net loss on the rental property but what if the property is wakon that is neither rented nor occupied well you can claim a nail annual value for up to two houses so if you live in one house and the other one is lying waken that's not a problem however if you have more than two houses and the additional houses also lying vacant you will have to include the deemed rental income from the house in your tax calculations so you will have to consider it let out for taxation purposes even when it's not now based on the rental income from a similar property you will need to calculate the rental income and pay tax on it now all of this can be confused using but that's how it is if required you can get help from a qualified tax professional while making these calculations all right let's now move to the next type of tax benefit available in the new tax regime many companies offer a host of reimbursements in the CTC that an employee can claim by producing the required bills and proofs these include reimbursements for fuel and travel driver's salary home on internet books and periodicals Etc you can save tax by opening for these reimbursements they are not subject to tax under both the old and new tax regime provided you present the bills and the proof in the absence of the required proofs your employer will subject these two taxes as applicable but do not that these reimbursements are not given outside your CTC or salary it's your salary that is structured to include these reimbursements so if you don't present the required proof you will have to pay tax on that part of your salary now these items are tax free under the new regime because they're configured as reimbursements and not deductions or exemptions these are expenses that you made for your employer as part of your work and your employer reimburse you for them you can talk to your HR or accounts Department regarding this reimbursements or you can take a look at your employment offer letter it often mentions the retail all right let's now take a quick look at some of the other tax saving Avenues in the new [Music] regime so we have discussed the main tax benefits available in the new tax regime there are a few others but they are pretty specialized and subject to certain conditions I will list them out for you if any of them applies to your case please dig deeper talk to a tax adviser if required number one a deduction of 33.33% or 15,000 whichever is less on family pension now Family pension is the pension a family member receives after the pensioner's death number two gifts of of up to 50,000 rupes number three gratuity of up to 20 lakh rupees under Section 1010 number four an amount of up to 5 lakh received in the case of voluntary retirement under Section 1010 c number five leave in cment amount of up to 25 lakh rupees under Section 1010 AA this is applicable at the time of leaving the job not while you're still with the company number six allowance for to travel or conveyance for official purposes and transport allowance for the specially abled number seven daily allowance if the place of work is different from the usual one number eight certain non- taxable prerequisite for official purposes such as company provided laptop medical facilities interest free salary loan Etc so these are the some ways in which you can save tax in the new tax regime but there is one case where your new tax regime can actually be bad for you let's see it now in order to to simplify taxation the government will likely be pushing the new tax regime for a taxpayer the new regime is more convenient too but there is an important caveat here in the new regime it's the taxpayers responsibility to save and invest there is no tax living push from the government so it's better suited for those who can manage their Investments and insurance on their own however if external push is necessary for you to invest and save don't be tempted by the new regime despite its complexities the old regime would still be better for you so Choose Wisely and with this we have come to the end of this video hope you liked it and if you did don't forget to like share and subscribe and I'll be back soon with another video till then take care mutual fund Investments are subject to Market risks read all scheme related documents carefully

Channel: ET Money

Views: 120,786

Keywords: income tax new regime, new tax regime, new tax regime exemption, new tax regime deductions, save income tax in the new regime, how to save tax in new tax regime, tax planning, tax savings in new regime, new tax calculations, Tax regieme, how to save tax, new tax slabs

Id: z74gn1i9Ovg

Length: 10min 48sec (648 seconds)

Published: Thu Feb 01 2024