Many changes have been proposed to the new income tax slab in Union Budget 2023. The basic exemption limit has been increased from Rs. 2.5 lakh to Rs. 3 lakh and the tax rebate has been hiked on income up to Rs. 7 lakh against Rs. 5 lakh earlier. However, the old tax slabs regime is still in effect. Hence, taxpayers can choose between the two regimes – New vs Old Tax Regime – when paying their taxes. So, which tax regime should NRI taxpayers choose after the announcement of union budget 2023 for NRIs?
New vs Old Tax Regime: Check Which is better for NRIs
Here is the comparison between the new and old tax regime. It is important to note that the new income tax structure now is the default tax regime. If you don’t choose any of the regimes, your income will be set against the new regime at the time of income tax assessment.
New vs Old Tax Regime: Deductions & Exemptions
|Exemptions||Old Tax Regime||New Tax Regime|
|HRA exemption||Available||Not available|
|Professional Tax||Available||Not available|
|Interest on housing loan||Available||Not available|
|Deduction under 80C LIC, PE, ELSS, ULIP, home loan principal repayment, tuition fees, Sukanya Samridhi, etc.||Available||Not available|
|Own contribution in NPS||Available||Not available|
|Medical insurance||Available||Not available|
|Disability deduction u/s 80U||Available||Not available|
|Interest on education loan||Available||Not available|
|Interest on e-vehicle loan||Available||Not available|
|Donation to fund/ trust||Available||Not available|
|Donation to political party||Available||Not available|
|Saving bank interest deduction up to Rs. 10,000||Available||Not available|
The new tax regime allows the taxpayers to save more taxes. However, you can’t claim any deductions, other than standard deduction, under the new tax regime. On the other hand, you are eligible for several deductions under the old income tax regime, including an upfront deduction of Rs. 50,000. Consequently, it brings your taxable income, with investments, down significantly.
For example, if your salary is Rs. 9 lakh a year, you will have to pay Rs. 45,000 as tax because you can’t claim deductions to bring down the taxable income under the new income tax regime. In contrast, someone opting for the old tax regime can claim several exemptions u/s 80C & 80D, interest on home loan, etc. to reduce their taxable income to Rs. 5,00,000 and the tax amount to zero, on an annual income of Rs. 9 lakh.
Which is better for you?
People with higher annual income can opt for the old income tax regime if they invest in long-term tax-savings schemes and have a home loan. The new income tax regime looks a good fit if you don’t have investments or loans to claim deductions.
There are dozens of investment options available for NRIs in India to grow their wealth and claim deductions under different sections. So, what are you waiting for? Download SBNRI App to invest digitally in India from your country of residence or ask any questions regarding investment, taxation, repatriation, and a lot more.
When comparing the old and new tax regime, you may get confused or have queries regarding the same. NRIs living around the world can ask any questions related to the Union Budget 2023-24, such as NRI taxation, TDS, investment, etc. You can download SBNRI App to connect with our NRI Tax / investment experts and get end-to-end assistance related to NRI tax filing. SBNRI will also help you get a lower TDS Certificate.
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