Confused between old and new tax regimes: Here are key factors to help you choose before filing your ITR
Old vs new tax regime: Confused between the old and new tax regimes for FY 2024-25? Understand key differences like tax slabs, deductions and exemptions to make the best choice. Use income tax calculator to compare both regimes and decide which saves you more before filing your ITR this year.
Old vs new tax regime: As the financial year has ended, taxpayers will now begin gathering their documents to file their income tax returns (ITR) before the deadline of July 31, 2025.
Just like last year, one key question taxpayers must ask themselves is whether the new tax regime is the right choice for them. The new regime offers concessional tax rates but does not allow deductions under various provisions such as Sections 80C, 80D, 80DD and 80G, among others.
Here’s a guide to help you make an informed decision about which tax regime to choose.
What are the differences in tax slabs for FY 2024-25?
Under the new tax regime, no income tax is payable on income up to ₹7 lakh, thanks to the rebate under Section 87A. For higher-income earners, tax is calculated based on slab rates. There is no tax on income up to ₹3 lakh. Income between ₹3 lakh and ₹7 lakh is taxed at 5 per cent, while income between ₹7 lakh and ₹10 lakh is taxed at 10 per cent.
Refer to the table below for the complete breakdown:
| Upto ₹3 lakh | Nil |
|---|---|
| From ₹3-7 lakh | 5 percent |
| From ₹7-10 lakh | 10 per cent |
| From ₹10 - 12 lakh | 15 per cent |
| From ₹12 -15 lakh | 20 per cent |
| Above ₹15 lakh | 30 per cent |
The old tax regime's tax slabs are as follows:
| Upto ₹2.5 lakh | NIL |
|---|---|
| 2.5-5 lakh | 5 per cent |
| 5-10 lakh | 20 per cent |
| 10-50 lakh | 30 per cent |
What is the standard deduction allowed under both tax regimes?
The standard deduction under the old tax regime is ₹50,000, while under the new tax regime, it has been increased to ₹75,000 for FY 2024–25.
What can you claim and not claim under the new tax regime?
You can claim deductions under Chapter VI-A, such as Sections 80C, 80D, 80DD, and 80G. However, under the new tax regime, most deductions are not allowed—except those under Sections 80CCD(2), 80CCH, and 80JJAA, as specified in Section 115BAC of the Income Tax Act, 1961.
Do you need to opt for new tax regime while filing the income tax return?
The new tax regime is the default option, so you don’t need to actively choose it. However, if you wish to opt for the old tax regime, you must specifically select it.
What is the ideal tax regime to choose?
There is no definitive right or wrong choice—it depends on your income and investments. You can use the income tax calculator to determine which regime is more beneficial for you.
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