New Income Tax Regime: Who Doesn't Have to Pay Tax?

Who Is Exempt From Paying Taxes?

Introduction

The Indian government has implemented a new income tax system that provides taxpayers with a number of advantages. Individuals with taxable incomes up to seven lakh rupees will not be required to pay income tax under the new tax system. Compared to the prior ceiling of five lakh rupees, this is a huge rise.

Higher Standard Deduction for Salaried Personnel

For salaried personnel, the new system also provides a higher standard deduction of Rs. 50,000. In order to reduce their taxable income before determining their tax obligation, salaried personnel can now deduct Rs. 50,000 from their income.

Reduced Tax Rate for Salaried Workers

The new system also features a reduced tax rate for salaried workers. For salaried workers with taxable income up to Rs. 15 lakh, the tax rate is now 20%, down from 30% under the previous system.

Tax Obligation Example

These modifications will allow a lot more people to reduce their tax obligations. For instance, under the new regime, a salaried employee with a taxable income of Rs. 7 lakh would now pay Rs. 0 in tax as opposed to Rs. 2 lakh under the previous regime.

Optionality of the New System

It's crucial to remember that the new system is optional. If people would choose, they can stick with the previous system. The majority of taxpayers will probably convert to the new system because the old one is no longer as appealing.

What Happens if You Fail to File Your Income Tax Return?

The government may fine you if you don't file your income tax return. The fine for failing to submit your return before the deadline is Rs. 5,000. However, if your taxable income is substantial, the fine can be larger.

Consequences of Non-filing

You can be prohibited from filing your return in the future in addition to the fine. As a result, you would not be eligible for any tax breaks or exemptions.

Importance of Timely Filing

Everyone must timely file their income tax returns, which is highly significant. You can ask a tax expert for assistance if you're confused how to file your return.

Conclusion

For many taxpayers, the new income tax system is a great respite. A bigger standard deduction, a reduced tax rate, and the choice to not pay any tax if your taxable income is below Rs. 7 lakh are just a few of the advantages it provides.

Seek Professional Assistance

Before deciding to convert to the new regime, it is crucial to comprehend the norms and guidelines. If you have quarries, you should get professional assistance.

Additional Details

• The new income tax system will go into force on April 1st, 2023.
• Those who opt to use the new system will be required to do so for the entire fiscal year.
• People who are unsure of switching to the new system should get expert counsel.