Significant taxation reforms were proposed in the Union Budget 2023–2024, particularly for the new tax regime. Investors should pick a regime that suits them, make a list of investments they want to make, figure out the tax repercussions, and make their investments by March 31st. The new income tax slabs will go into effect on April 1, 2023, and taxpayers should decide whether to use the old income tax regime or the new income tax regime in the fiscal year 2023–24. The AY 2024–2025 will see the implementation of the new tax slabs under the New Tax Regime as suggested in Finance Bill 2023. From Assessment Year 2024–2025, the tax liability under the old and new regimes will be applied. So how senior citizens with an income of ₹10 lakh can save tax in FY 2022-23 (AY 2023-24), let’s ask our different tax experts.
Suresh Surana, Founder, RSM India
Comparable computation of tax liability under the two regimes for a taxable income of Rs. 10,00,000 is shown as under for your ready reference:
| Proposed New Regime for FY 2023-24 (“default regime”) | ||
| Tax Slab | Rate | Amount |
| Upto RS. 300,000 | Nil | Nil |
| RS. 3,00,001 to RS. 6,00,000 | 5% | 15,000 |
| RS. 6,00,001 to RS. 9,00,000 | 10% | 30,000 |
| RS. 9,00,001 to RS. 12,00,000 | 15% | 15,000 |
| Basic Tax | 60,000 | |
| Add : Health & Education cess @ 4% | 2,400 | |
| Assessed Tax | 62,400 |
| Old Regime | ||
| Tax Slab | Rate | Amount |
| Upto RS. 300,000 | Nil | Nil |
| RS. 3,00,001 to RS. 5,00,000 | 5% | 10,000 |
| RS. 5,00,001 to RS. 10,00,000 | 10% | 1,00,000 |
| RS. 10,00,001 & above | 15% | Nil |
| Basic Tax | 1,10,000 | |
| Add : Health & Education cess @ 4% | 4,400 | |
| Assessed Tax | 1,14,400 |
The above computations are based on the assumption that there are no deductions under chapter VIA.
Based on the computation of tax liability under both old and proposed new regime, it can be observed that the new regime will be beneficial for senior citizens earning income of Rs. 10,00,000, However, it is pertinent to note that apart from standard deduction u/s 16(ia) of Rs. 50,000 on salary and pension, other deductions under chapter VIA and tax exemptions shall not be available under new tax regime.
Anirudhha Bose, Chief Business Officer
Prior to the union budget this year, the old regime made more sense for senior citizens as they were eligible for a basic exemption limit of Rs. 3 lakhs under the old regime and not in the new one. However, this year’s union budget has changed that – the exemption limit has now been made Rs. 3 Lakhs in both regimes. Apart from this, the new tax regime has introduced a standard deduction of Rs. 50,000 for pensioners.
With the recent change, we feel that it makes sense for a senior citizen earning Rs. 10 Lakhs per annum to opt for the new regime now. Your retirement years are not the time to be running helter- skelter in an effort to max out your deductions by investing into what are mostly locked in products! The new regime is cleaner, simpler and a lot more hassle free. Rather than having to worry about making tax saving investments at this stage of your life, you’re better off utilizing the funds for your current lifestyle or maintaining liquidity for unforeseen expenses or medical emergencies instead.
Anshu Agarwal, Global Head of Finance at Branch International
For senior citizen any income more than 3 lacs is taxable in both the regime. However, the tax rate for other slabs are different and is lower in the new regime. Also, if your income is less than 7 lacs you are technically not taxable in new regime. However, one of the biggest differences in new tax regime is that lot of deductions are not allowed. Also, once you opt for the new regime you cannot go back to old regime. So one has to be very careful when we are selecting the new regime. On a simple logic it works for individuals whose income is less than 7 lacs or if you have deductions of less than ₹4.5 lacs to claim for higher income individuals.
Satyen Kothari, the founder and CEO of Cube Wealth
If a senior citizen has an income of ₹10 lakh, the applicable tax under the new regime would be ₹45,000 while for the old regime it would be ₹60,000 without a home loan or insurance plan.
Hence, senior citizens should choose the new regime, if they don’t have a significant amount of tax savings via Home Loan and Insurance plans.
This is because these types of tax saving options are long term and you cannot/should not stop midway. If you’re paying you might as well reap the benefit.
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