🧾 Old vs New Tax Regime – A Clear Comparison for FY 2024–25
Choosing the right tax regime is crucial for saving money and planning your finances smartly. With the new tax regime set as default from FY 2024–25, here’s a comparison to help you decide the better option. Please note, this information is related to FY 2024-25 income tax return filing for the period 1 April, 2024 to 31 March, 2025 and it is not related to recently released budet amendments which relates to FY 2025-26 income tax return filing for the period 1 April, 2025 to 31 March, 2026.
Table of Contents
📊 Tax Slabs Comparison
| Income Slab (₹) | Old Tax Regime | New Tax Regime |
|---|---|---|
| 0 – 2.5 lakh | Nil | Nil |
| 2.5 – 5 lakh | 5% | 5% |
| 5 – 7.5 lakh | 20% | 10% |
| 7.5 – 10 lakh | 20% | 15% |
| 10 – 12.5 lakh | 30% | 20% |
| 12.5 – 15 lakh | 30% | 25% |
| Above 15 lakh | 30% | 30% |
✅ Key Benefits of Old Regime
- Claim deductions under Section 80C (up to ₹1.5 lakh), 80D, HRA, LTA, and more.
- Suitable if you have home loans, insurance, or high investments.
- Ideal for taxpayers who actively plan deductions.
🧾 Key Deductions Under the Old Tax Regime
1. Section 80C – Investments & Payments
- Maximum Deduction: ₹1,50,000
- Eligible Investments/Payments:
- Life Insurance Premiums
- Employee Provident Fund (EPF)
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- 5-Year Tax-Saving Fixed Deposits
- Equity Linked Saving Schemes (ELSS)
- Principal repayment on housing loan
- Children’s tuition fees
2. Section 80CCD(1B) – Additional NPS Contribution
- Maximum Deduction: ₹50,000
- Note: This is over and above the ₹1.5 lakh limit under Section 80C.
3. Section 80D – Health Insurance Premiums
- For Self, Spouse, and Dependent Children:
- Up to ₹25,000
- If any insured person is a senior citizen (aged 60 or above): Up to ₹50,000
- For Parents:
- Up to ₹25,000
- If parents are senior citizens: Up to ₹50,000
- Preventive Health Check-up:
- Up to ₹5,000 (included within the above limits)
4. Section 80E – Interest on Education Loan
- Deduction: Full interest paid on education loan
- Duration: Up to 8 years
5. Section 24(b) – Home Loan Interest
- Deduction: Up to ₹2,00,000 for self-occupied property
- Note: For let-out property, the entire interest amount is deductible without any upper limit.
6. Section 80TTA / 80TTB – Interest on Savings Accounts
- Section 80TTA (for individuals below 60 years):
- Deduction up to ₹10,000 on interest from savings accounts
- Section 80TTB (for senior citizens):
- Deduction up to ₹50,000 on interest from savings and fixed deposits
7. Section 80G – Donations to Charitable Institutions
- Deduction: 50% or 100% of the donated amount, depending on the institution
- Note: Some donations have qualifying limits; others do not.
8. Section 80GG – House Rent Paid (for those not receiving HRA)
- Deduction: Least of the following:
- ₹5,000 per month
- 25% of total income
- Actual rent paid minus 10% of total income
9. Section 80U – For Individuals with Disabilities
- Deduction:
- ₹75,000 for individuals with disability
- ₹1,25,000 for individuals with severe disability (80% or more)
10. Section 80DD – For Dependents with Disabilities
- Deduction:
- ₹75,000 for dependents with disability
- ₹1,25,000 for dependents with severe disability
📌 Additional Points
- Under the old tax regime, taxpayers can also claim exemptions such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and standard deduction of ₹50,000 for salaried individuals.
- These deductions and exemptions are not available under the new tax regime.
🚫 Limitations of Old Regime
- Higher tax rates.
- Requires extensive documentation.
- Can be complex for new taxpayers.
✅ New Tax Regime Benefits
- Lower tax rates across most slabs.
- No documentation required.
- Ideal for salaried individuals with fewer deductions.
💸 New Tax Regime Rebate Explained (Section 87A)
Under the new tax regime, taxpayers with income up to ₹7 lakh can claim a full tax rebate under Section 87A. This means:
- If your total taxable income is ₹7 lakh or less, you pay ZERO income tax.
- This is a key benefit of the new tax regime and makes it attractive for middle-class earners.
✅ Rebate Details
| Criteria | Details |
|---|---|
| Applicable Section | Section 87A |
| Maximum Income for Rebate | ₹7,00,000 |
| Maximum Rebate Amount | ₹25,000 |
| Effective Tax Payable | ₹0 (if income ≤ ₹7 lakh) |
| Applies To | Resident individuals only |
| Deductions Allowed | No (rebate is independent of 80C) |
📝 Note: This rebate is only available if you opt for the new tax regime. In the old regime, the 87A rebate applies only for income up to ₹5 lakh.
📌 Example
Taxpayer A has an income of ₹6.9 lakh and opts for the new tax regime.
→ Tax liability is ₹24,000.
→ Section 87A rebate = ₹24,000.
→ Net tax payable = ₹0
⚠️ If Income > ₹7 lakh?
Even if your income exceeds ₹7 lakh by just ₹1, the entire rebate is lost, and full tax as per slab will apply.
This makes tax planning very important near the ₹7 lakh threshold.
✅ Available Deductions in the New Tax Regime
1. Standard Deduction
- Amount: ₹75,000
- Eligibility: Salaried individuals and pensioners
- Note: This deduction is applicable from FY 2023–24 onwards and is available under the New Tax Regime.
2. Employer’s Contribution to NPS (Section 80CCD(2))
- Amount: Up to 14% of salary (Basic + DA)
- Eligibility: Contributions made by the employer to the National Pension Scheme (NPS)
- Note: This deduction is available under the New Tax Regime.
3. Family Pension (Section 57(iia))
- Amount: Up to ₹25,000
- Eligibility: Individuals receiving family pension
- Note: This deduction was increased from ₹15,000 to ₹25,000 in Budget 2024.
4. Contributions to Agnipath Corpus Fund
- Amount: As specified under the scheme
- Eligibility: Individuals contributing to the Agnipath Corpus Fund
- Note: This deduction is available under the New Tax Regime.
❌ Deductions Not Available in the New Tax Regime
Taxpayers opting for the New Tax Regime cannot claim the following deductions:
- Section 80C: Investments in PPF, ELSS, NSC, etc.
- Section 80D: Health insurance premiums
- Section 80E: Interest on education loans
- Section 80G: Donations to charitable institutions
- Section 10(13A): House Rent Allowance (HRA)
- Section 10(14): Transport allowance
- Section 80TTA: Interest on savings accounts
- Section 80U: Deduction for individuals with disabilities
- Section 80DD: Deduction for dependents with disabilities
📌 Important Notes
- The New Tax Regime is the default tax regime as per the Finance Act 2024. incometax.gov.in
- Taxpayers can opt out of the New Tax Regime and choose the Old Tax Regime if they have business income.
- The Old Tax Regime allows a broader range of deductions and exemptions, which may result in lower taxable income for some individuals.
🚫 Limitations of New Regime
- No major deductions allowed (80C, 80D, etc.).
- You can’t claim exemptions like HRA or home loan interest.
💡 Which One Should You Choose?
- If you invest in LIC, PPF, ELSS, home loan, and health insurance → Old Regime may save more.
- If you have minimal investments or prefer simplicity → New Regime is better.
📅 Important Note
To opt for the old regime, you must submit Form 10-IEA before the due date while filing your ITR.
📅 Key ITR Filing Deadlines
- 31 July 2025: Deadline for individuals, Hindu Undivided Families (HUFs), Associations of Persons (Aop), and Bodies of Individuals (BOIs) not requiring audit.
- 31 October 2025: Deadline for businesses and professionals whose accounts require audit.
- 30 November 2025: Deadline for entities involved in international or specified domestic transactions requiring transfer pricing reports.
- 31 December 2025: Last date to file belated or revised returns for FY 2025–26.
⚠️ Penalties for Late Filing
- A penalty of up to ₹5,000 may be levied for filing returns after the due date. However, if the total income is below ₹5 lakh, the penalty is limited to ₹1,000.
- Filing an updated return after 31 March 2025 may attract an additional tax of 50% plus interest.
🧾 Filing Options
- Online: Through the Income Tax e-Filing portal: incometax.gov.in
- Offline: Using the updated Excel or Java utilities provided by the Income Tax Department.
FAQ 1: What is the difference between the Old and New Tax Regime in India?
Answer:
The Old Tax Regime allows you to claim various deductions such as Section 80C (for PPF, LIC premiums, and ELSS), Section 80D (health insurance), and HRA (House Rent Allowance). It also offers benefits like tax exemptions. In contrast, the New Tax Regime offers lower tax rates but does not allow most deductions, making it a simpler option for individuals with fewer tax-saving investments. Choose based on your eligibility for deductions and exemptions.
FAQ 2: How do I decide between the Old and New Tax Regime for FY 2024–25?
Answer:
Choosing between the Old Tax Regime and the New Tax Regime depends on your financial situation. If you have significant investments eligible for deductions under 80C (like PPF, LIC, or EPF), home loan deductions, or health insurance premiums, the Old Tax Regime may be more beneficial. However, if you prefer a simpler tax calculation with lower tax rates, the New Tax Regime is a good choice.
FAQ 3: Is the New Tax Regime better for tax filing in India for FY 2024–25?
Answer:
The New Tax Regime is ideal for individuals who prefer simpler tax filing without worrying about extensive documentation for deductions. It offers lower tax rates and no need for tax-saving investments. However, it is less beneficial if you want to take advantage of tax-saving deductions like Section 80C or HRA exemptions. The New Tax Regime has become the default option from FY 2024–25, but you can choose the Old Tax Regime if deductions are a priority.
FAQ 4: Can I switch between the Old Tax Regime and New Tax Regime for FY 2024–25?
Answer:
Yes, taxpayers can switch between the Old Tax Regime and New Tax Regime, provided you do not have business income. For individuals with salaries or pension income, you can opt for either regime when filing your tax returns. The New Tax Regime is now the default, but if you prefer to claim deductions, you may choose the Old Tax Regime. Ensure to make your choice before filing your tax return using Form 10-IEA.
FAQ 5: What is the maximum income for claiming a tax rebate under the New Tax Regime in India?
Answer:
Under the New Tax Regime for FY 2024–25, individuals with an annual income up to ₹7 lakh can claim a full tax rebate under Section 87A. This means they will pay zero tax if their total taxable income is ₹7 lakh or less. However, if your income exceeds ₹7 lakh, you will be taxed according to the new lower income tax slabs.
FAQ 6: What is the deadline for tax filing in India for FY 2024–25?
Answer:
The last date for filing income tax returns (ITR) for the financial year 2024–25 (Assessment Year 2025–26) is typically July 31, 2025 for individuals without business income. However, it’s always advisable to file your returns before the deadline to avoid penalties and interest. Always check the Income Tax Department website for updates on any changes to the filing deadline.