Choosing between the Old Tax Regime and the New Tax Regime in India depends on the income structure and how many deductions or exemptions we claim. Here’s a simplified comparison to help
✅ Old Tax Regime
Allows Deductions & Exemptions like:
- Section 80C (Investments in PF, PPF, ELSS, LIC, etc.)
- HRA (House Rent Allowance)
- Standard Deduction (₹50,000 for salaried employees)
- LTA, Home Loan Interest, etc.
📊 Slabs (as of FY 2024–25):
- ₹0 – ₹2.5 lakh → NIL
- ₹2.5 – ₹5 lakh → 5%
- ₹5 – ₹10 lakh → 20%
- ₹10 lakh+ → 30%
Best For: Those who claim deductions/exemptions and make tax-saving investments.
✅ New Tax Regime
No major deductions or exemptions allowed (except NPS, employer EPF contribution, etc.). As per the finance bill, 2025 (Union Budget changes 2025) irrespective of the age.
📊 Simplified Slabs (as of FY 2025–26):
- ₹0 – ₹4 lakh → NIL
- ₹4 – ₹8 lakh → 5%
- ₹8 – ₹12 lakh → 10%
- ₹12 – ₹16 lakh → 15%
- ₹16 – ₹20 lakh → 20%
- ₹20 – ₹24 lakh → 25%
- Above ₹24 lakh → 30%
Best For: Those with no major investments or who want a hassle-free tax filing process.
🔍 Which One Should we select?
| Scenario | Recommended Regime |
|---|---|
| You claim deductions (80C, HRA, etc.) | Old Regime |
| You have minimal deductions | New Regime |
| You prefer simplicity over saving | New Regime |
| Your salary structure includes perks | Old Regime (usually) |
✅ Some Very Important Points:
Under the New Tax Regime, most of the exemptions and deductions are not available, including deductions for donations under Section 80G.
❌ What is Not Allowed in New Regime:
- Section 80C (Investments like LIC, PPF, ELSS, etc.)
- Section 80D (Medical insurance)
- Section 80G (Donations to charitable trusts and institutions)
✅ What is Still Allowed in the New Regime (as of FY 2024–25):
- Standard Deduction of ₹50,000 (for salaried & pensioners)
- Employer’s contribution to NPS (Section 80CCD(2)) – up to 10% of salary
- Rebate under Section 87A (income up to ₹7 lakh → No tax)