People are required to file income tax returns when their income rises. In this case, the tax slab is used to determine how much tax to levy on each individual. Moreover, there are two tax systems in the nation that require the filing of ITRs. The first is the previous tax system, and the latter is the new system. Each tax system has its own unique strengths. People in this circumstance should take care of a few crucial items to avoid losing money when filing their ITRs the following year.
Financial statement
Nirmala Sitharaman, the nation’s finance minister, stated in Budget 2023 that under the new tax system, individuals filing domestic ITRs will not be required to pay taxes on income up to Rs 7 lakh per year. People in this condition, whose annual income is less than 7 lakh rupees, will not be required to pay any tax if they file an ITR under the new tax system.
Advantages of the old income tax system
The previous tax system, on the other hand, is still available to anyone with incomes over Rs 7 lakh who wants to reduce their tax burden. Taxpayers might really save money under the previous tax system by making donations, investing money, or paying for medical care or other expenses. If a taxpayer’s income is greater than Rs 7 lakh per year, they must choose which tax system they will file their ITR under.
Get investing right away
The government will deduct tax from your taxable income when you file your ITR if your income is taxable and you haven’t put any money in a tax-saving plan. Additionally, you can benefit from tax reductions by using various strategies outlined in the IT Act if you file an ITR from the previous tax system. If you want to save money on taxes next year under the old system, start investing in the tax-saving plan right away.
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