Learn How to Calculate Income Tax Liability Under New Regime 2022-2023

The New Company Tax Regime:

Under the brand-new regime brought in September 2019, a tax price of 15 percent became introduced under Section 115BAB for newly included domestic organizations, which make sparkling funding through March 31, 2023, for manufacturing, production, research, or distribution of such articles or matters manufactured.

In each case, deciding on the concessional tax rate means organizations can not avail of exemptions, deductions, or incentives supplied under the old tax regime.

What are The Deductions and Exemptions Under The Brand-New Regime?

You cannot declare the subsequent deductions/exemptions/spark off under the new tax system:

• The well-known deduction, expert tax, and entertainment allowance on salaries

• LTA (Leave Travel Allowance)

• HRA (House Rent Allowance)

• Minor infant profits allowance

• Helper allowance

• Children’s schooling allowance

• Other unique allowances [Section 10]

• Interest on housing mortgage at the self-occupied assets or vacant assets (Section 24)

• Business deductions, and commercial enterprise expenses on detailed companies under Income-tax Act.

• Tax saving investments under Chapter VI-A deduction (80C,80D, 80E, and so on)

• Without exemption or deduction for all other perquisites or allowances

• Deduction from own circle of relatives’ pension profits.

• Set off any loss or depreciation carried ahead from in advance years with regards to the desired companies.

• Set off of loss under Income from House assets with every other Income

What May be Claimed?

1. Transport allowance for the specially-abled person.

2. Conveyance allowance to satisfy the conveyance expenditure incurred as a part of the employment.

3. Under Section 80CCD (Deduction for Notified Pension Scheme)

4. Under Section 80JJAA (Deduction for employment of latest personnel)

5. Depreciation under phase 32 of the Income-tax act besides extra depreciation.

6. Any allowance granted to satisfy the fee of journey on an excursion or transfer

7. Any allowance, whether, granted on an excursion or during the adventure about the transfer, to satisfy the normal day by day fees incurred through a worker due to absence from his everyday region of duty;

8. Any allowance granted to satisfy the expenditure incurred on conveyance in the overall performance of obligations of a workplace or employment of profit. However, if the free conveyance is supplied through the employer, the exemption will now no longer be available.

9. Transport allowance granted to a worker, who's blind or deaf and dumb or orthopedically handicapped with the incapacity of decrease extremities, to satisfy his expenditure for the cause of commuting among the region of his house and the region of his duty.

Income Tax Liability Under New Regime:

With impact from date FY 2020-21, someone has the choice to hold on with the present income tax regime and declare the present tax deductions and exemptions, or choose the brand-new tax regime and allow pass of 70 tax deductions and exemptions like sections 80C, 80D, tax exemption on HRA, LTA, and others.

Moreover, folks who are now no longer pose enterprise income which can be salaried individually could be selected among the 2 tax regimes each financial year. A person who has the profits from the enterprise could select the brand-new tax regime. But as soon as it's far selected then they could transfer to the old tax regime once in their life.

Hence whilst you are making plans to select for the brand-new tax regime withinside the gift FY 2021-22, then it's far vital to discover the profits tax slabs and the prices withinside the new tax regime and the technique to compute your profits tax liability.

Income Tax Slabs & Rates for Individuals:

You must remember that the person choosing the new tax regime is eligible to avail of the deduction under section 80CCD (2) of the income tax act 1961.

Methods to Calculate Income Tax Liability under New Tax Regime?

It is important to discover the technique to compute one’s income tax liability below the new tax regime. Under is an example to let you compute your income tax liability under the new tax regime.

Just Imagine your gross taxable income in the FY 2020-22 is Rs 17 lakh. Moreover, assume your employer has deposited Rs 70,000 to your Tier-I NPS account. You could claim the deduction for that under section 80CCD.

Since you qualified to claim the deduction for the same under the new tax regime, your net taxable income would be Rs 16.30 lakh (Rs 17 lakh minus Rs 70,000). You are had to compute the income tax liability on Rs 16.30 lakh for FY 2021-22 below the new tax regime.

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