The Old Tax Regime assists in both investment and tax savings. It offers several deductions such as 80C, 80D, 80CCD, HRA, home loan, education loan, and donations. For taxpayers who plan smartly, it can prove to be better than the New Tax Regime.
Old Tax Regime: The Old Tax Regime can still prove to be better than the New Tax Regime for taxpayers. In this system, several deductions are available based on investment and expenditure, such as exemptions under 80C for PPF, ELSS, life insurance, HRA, LTA, NPS, and home loans. According to tax experts, the Old Tax Regime is a smart and beneficial option for those who invest with long-term planning.
Investment and Tax Savings Together
The Old Tax Regime promotes investment and also offers an opportunity for tax savings. Under 80C, you can claim a deduction of up to ₹1.5 lakh on PPF, ELSS, LIC, tuition fees, etc. This means that the more you invest in savings, the less tax you will have to pay. This facility is limited or unavailable in the New Tax Regime.
Relief on Health and Life Insurance
In the Old Tax Regime, deductions are also available on the premium of health and life insurance. A deduction of up to ₹25,000 is available for self and family, and up to ₹50,000 for parents (senior citizens). In addition, tax exemption is also available on life insurance premiums under 80C.
Additional Exemption by Investing in NPS
In the Old Tax Regime, you can claim an additional deduction of ₹50,000 under 80CCD(1B) by investing in NPS. This deduction is in addition to the limit of 80C. The advantage of this is that tax savings increase, and a retirement fund is prepared for the long term.
Tax Savings from HRA and LTA
If you live in a rented house and receive HRA in your salary, you can take advantage of it. A large portion of the salary can be saved from tax with the help of HRA. In addition, expenses incurred on traveling in India under LTA (Leave Travel Allowance) are also exempt from tax.
Savings on Home and Tax with Home Loan
If you have taken a home loan, a deduction of up to ₹2 lakh is available on its interest in the Old Tax Regime. This reduces the EMI and also reduces the tax. This facility is not available in the New Tax Regime.
Relief on Education, Savings, and Donations
Deduction on interest on education loan, exemption of up to ₹10,000 on savings account, and exemption of up to ₹50,000 for senior citizens are also available in the Old Tax Regime. Tax relief is also available under 80G for donating to an organization.
If you are eligible for several deductions such as 80C, 80D, 80CCD, HRA, home loan, then the Old Tax Regime can be most beneficial for you. This can significantly reduce your taxable income and minimize your tax liability. This system is especially beneficial for middle-class and salaried people.
A Long Fund is Created From Tax Savings
By investing a few thousand or lakhs of rupees every year as tax savings, this amount can be converted into a large fund in the long term. The Old Tax Regime benefits those who invest with smart planning and long-term thinking.
