Old vs New Income Tax Regime Rates

Detailed Comparison of Old and New Income Tax Regimes

The Union Budget 2025, announced by Finance Minister Smt. Nirmala Sitharaman, has introduced significant changes to income tax structures, offering substantial benefits to the middle class. Choosing the right regime—old or new—is key to optimizing your income and minimizing your tax liability. Let’s dive into a detailed comparison of both regimes, the updated slabs, and expert insights to help you make an informed choice.

The Old Income Tax Regime

The old income tax regime is ideal for individuals who want to leverage deductions and exemptions to reduce their taxable income. Below is the tax slab structure:

Key Benefits of the Old Regime

• Deductions under Section 80C: Investments in instruments like PPF, NSC, and ELSS can reduce taxable income by up to ₹1.5 lakh.
• Additional Deductions: Includes exemptions for house rent allowance (HRA), medical insurance premiums, and education loan interest.
• Encourages Savings: Ideal for individuals focused on saving and investing in tax-saving instruments.

The New Income Tax Regime under Union Budget 2025

The Union Budget 2025 has further streamlined the new income tax regime, making it an attractive option for middle-class taxpayers. With lower tax rates and an increased rebate limit, the new regime offers simplicity and savings. Here's the updated tax slab structure:

Highlights of the New Regime

• Higher Rebate Limit: No tax for individuals earning up to ₹12 lakh annually due to an increased rebate and standard deduction.
• Lower Tax Rates: Attractive for taxpayers not relying on deductions or exemptions.
• Simplified Tax Filing: Fewer calculations and documentation required, saving time and effort.

Which Regime Should You Choose?

Old Regime:

• Best for individuals with high investments in tax-saving instruments like PPF, NSC, insurance premiums, or NPS.
• Suitable for those eligible for HRA and other exemptions.

New Regime:

• Ideal for individuals seeking lower tax rates and simplicity in tax filing.
• Recommended for those with minimal investments in tax-saving instruments.

Expert Insights

• The new regime now allows salaried individuals to effectively pay no tax up to ₹12.75 lakh, considering the rebate of ₹60,000 and a standard deduction of ₹75,000.
• The old regime is advantageous for long-term savings and investment-oriented taxpayers, while the new regime benefits those focused on higher immediate take-home pay.

Maximize Your Savings with JJ Tax

Still unsure which regime suits you best? Let the experts at JJ Tax help! With personalized advice at a minimal cost, we’ll help you plan your taxes and maximize your earnings.

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