Income Tax News: New vs Old Tax Regimes – 6 Key Strategies to Maximise Your Refund While Filing ITR for 2024

Income Tax News: Filing your 2024 Income Tax Return (ITR)? Your refund may vary greatly depending on which of the two new and old tax regimes you choose. You may make the most of your hard-earned money and optimise your tax savings by employing the appropriate tactics. These are the top six tactics to help you choose wisely and maximise your return.

1. Understand the Differences Between the New and Old Tax Regimes

Having an understanding of the fundamental distinctions between the two tax regimes is the first step towards making an informed decision. A number of exemptions and deductions are allowed under the old tax regime, including the HRA (house rent allowance), LTA (leave travel allowance), and deductions under Sections 80C and 80D, among others. Conversely, the new tax regime eliminates the majority of deductions and exemptions while offering reduced tax rates.

Example:

• Old Regime: If you have high investments in tax-saving instruments and significant HRA, you might benefit more.
• New Regime: If you have fewer investments and prefer a simplified tax structure, this could be advantageous.

2. Calculate Your Taxable Income

Your decision should be in line with your financial objectives. The old tax regime may be preferable if your goals are long-term savings and investing because it provides incentives for saving. However, if you need more liquidity now, the new regime with lower tax rates could be more beneficial.

3. Consider Your Financial Goals

Your choice should align with your financial goals. If you're focused on long-term savings and investments, the old regime might be better as it incentivizes saving. However, if you need more liquidity now, the new regime with lower tax rates could be more beneficial.

4. Utilise Digital Tools for Accurate Calculation

Many tools and apps are available to assist you in effectively calculating your taxes in this digital age. Utilise reputable tax filing software and government portals to evaluate your tax obligations under the two regimes. These resources can offer clarification and assist in preventing arithmetic errors.

5. Seek Professional Advice

Since tax regulations can be complicated, consulting a tax expert can give you important insights. A tax consultant can guide you through the nuances of both old and new tax regimes and recommend the best course of action based on your unique financial circumstances.

6. Stay Updated on Tax Law Changes

Tax regulations are constantly evolving, so it's important to stay up to date on the most recent changes. The upcoming Budget will be the first comprehensive budget of the Modi 3.0 administration. Tax rates, exemptions, and deductions may be modified in recent policy.