The new Tax Regime became a default option for taxpayers from Budget 2023 for the financial and the years 2023-24.

As you know New Tax Regime does away with most deductions and tax benefits. However, the Old Tax Regime is still available to taxpayers.

In this article, we are going to highlight lesser-known aspects of the New Tax Regime.

Lower Surcharge
For the Assessment year. AY 2024-25. under the old regime, the applicable rate of surcharge on income tax for individuals with total income (Income after all deductions) higher than 5 Cr is 37 %. This has taken the maximum marginal Rate of tax (MMRT) after health and education cess (HEC) of 4% to 42.74%. However, the surcharge rate on the income tax applicable for such individuals under the new tax regime has been notified as 25% in the Finance Act,2024. This brings MMRT under the new regime to 39%.

Marginal relief
Rebate under 87 A in case of a new Regime makes zero tax Liability a possibility. If total income is up to ₹ 7 lakh. What if total income marginally exceeds ₹ 7 lakhs? To relieve taxpayers of such a situation the section offers marginal relief unlike in the case of the old regime. But there are a couple of conditions to be met for marginal relief.

First, the total income should be in excess of ₹ 7 lakhs. Second, tax on total income. (Before adding HEC) should be greater than the total income in excess of ₹ 7 Lakh.

Opting Out
The new Regime, even with all such benefits may not be better, than the old regime for certain individuals.

Prime among them would be those who are heavily invested in the investments and insurance schemes for which deductions are available under the old regime.

So for salaried persons, there’s the benefit of switching between regimes and opting for the one that is beneficial at the time of filing ITR.

(An article for education and awareness Purpose. Do Consult your tax advisor).

Best Regards,
Santosh Akerkar