Budget 2023 : Old Regime and New Regime comparison with Example

Many people are hailing the government for "reducing middle-class taxes" via this budget.

The budget results do not suggest a savings under the new scheme like earlier Budget.

There is NO change in slab rates under Old Tax regime.

I am here with attaching 2 scenarios for Income Tax salary.

	Scenario 1 : If Person having 20 lakhs salary income and does not claiming any exemptions except standard deductions and professional Tax
			Amount in ₹
	Tax Slabs under New Regime	Tax Rates	Tax liability
		New Tax rate	NEW
	Up to 3 Lakhs		Nil
	₹ 3 lakhs -6 lakhs	5%	15,000
	₹ 6 lakhs - 9 lakhs	10%	30,000
	₹ 9 lakhs -12 lakhs	15%	45,000
	₹ 12 lakhs -15 lakhs	20%	60,000
	₹ 15 lakhs -20 lakhs	30%	134,250
	Total		284,250
	Tax Slabs under Old Regime	Tax Rates	Tax liability
		Old Tax rate	OLD
	Up to 2.5 Lakhs		Nil
	₹ 2.5 lakhs -5 lakhs	5%	12,500
	₹ 5 lakhs - 10 lakhs	20%	100,000
	₹ 10 lakhs -20 lakhs	30%	284,250
	Total		396,750
	Benefit under New regime since Tax liability lesser in this option without claiming any exemptions.
	Note: Standard deduction U/S 16(ia) ₹ 50, 000 considered and Professional tax -Section 16(iii) ₹  2,500 considered
	Scenario 2 : If Person having 20 lakhs salary income and subject to claiming exemptions and deductions
	Assuming that monthly rent is ₹ 12,000
1	80 C limit: 1,50,000
2	Standard deduction : 50,000 ( sec 16(ia))
3	Professional tax ( 16 (iii)) - ₹ 2,500
4	HRA : 12,000*12 = 1,44,000 ( assuming this amount is least of section 10(13A))
5	Interest on Housing loan  ₹ 2,00,000
	Total deductions: 1,50,000+50000 +2500+144000+ 200000= 5,46,500
			Amount in ₹
	New Tax Slabs	Tax Rates	Tax liability
		New Tax rate	NEW
	Up to 3 Lakhs		Nil
	₹ 3 lakhs -6 lakhs	5%	15,000
	₹ 6 lakhs - 9 lakhs	10%	30,000
	₹ 9 lakhs -12 lakhs	15%	45,000
	₹ 12 lakhs -15 lakhs	20%	60,000
	₹ 15 lakhs -20 lakhs	30%	134,250
	Total		284,250
	New Tax Slabs	Tax Rates	Tax liability
		Old Tax rate	OLD
	Up to 2.5 Lakhs		Nil
	₹ 2.5 lakhs -5 lakhs	5%	12,500
	₹ 5 lakhs - 10 lakhs	20%	100,000
	₹ 10 lakhs -20 lakhs	30%	136,050
	Total		248,550
	Benefit under Old Tax structure
	Note: Total income considered after availing above exemptions. ( HRA and Interest on housing loan both are considered )
	Note : Personal Tax rebate increased to 7 Lakhs in new regime whereas in old Tax Regime Personal tax rebate still 5 Lakhs only.
	That’s So smart by the Government.  I have not considered all exemptions available under Existing income tax act. If that is taken the difference be Wider.
Conclusion:  1. New tax rate Scheme is better if the person does not have any savings
	2. Old tax rate scheme is better if the person having savings.