The choice between the old tax regime and the new tax regime depends on individual preferences and financial circumstances. Here’s a brief comparison of the two regimes and their impact on homebuyers:
Old Tax Regime:
Under the old tax regime, taxpayers can claim deductions on various investments and expenses such as home loan EMI payments, principal repayment, and other eligible deductions, up to a maximum of Rs. 1.5 lakhs per year under Section 80C, and a deduction of up to Rs. 2 lakhs per year on interest paid on home loans under Section 24.
New Tax Regime:
The new tax regime offers lower tax rates but comes with a caveat of no tax deductions or exemptions except for specified allowances and deductions such as standard deduction, leave travel allowance, and professional tax. The tax rates are as follows:
Homebuyers who opt for the new tax regime may not be able to claim tax deductions on home loan EMI payments, principal repayment, or other eligible deductions. However, the lower tax rates may be beneficial for taxpayers with lower incomes or those who do not have significant investments or expenses that qualify for tax deductions.
Ultimately, the choice between the old and new tax regimes will depend on factors such as income, investments, expenses, and financial goals. Homebuyers are advised to consult a financial advisor or tax expert to determine which tax regime is best suited for their individual circumstances.