The Indian tax system offers two options: the Old Tax Regime (with deductions) and the New Tax Regime (lower rates but fewer benefits). From FY 2024-25 (AY 2025-26), the New Tax Regime remains the default option, but taxpayers can still choose the Old Regime if it benefits them.
Let’s compare both regimes to help you decide which one is better for your finances.
Key Differences Between Old & New Tax Regimes (FY 2024-25)
1. Tax Slabs Comparison
Old Tax Regime (With Deductions)
Income Range (₹) | Tax Rate |
Up to 2.5 Lakh | 0% |
2.5L – 5L | 5% |
5L – 10L | 20% |
Above 10L | 30% |
New Tax Regime (Default, Fewer Deductions)
Income Range (₹) | Tax Rate |
Up to 3 Lakh | 0% |
3L – 7L | 5% |
7L – 10L | 10% |
10L – 12L | 15% |
12L – 15L | 20% |
Above 15L | 30% |
2. Deductions & Exemptions Available
Tax Benefit | Old Regime | New Regime |
Standard Deduction (Salaried) | 50,000 | 50,000 |
HRA Exemption | Yes | No |
Section 80C (PPF, ELSS, FD, etc.) | Up to ₹1.5L | No |
Section 80D (Health Insurance) | Yes | No |
Home Loan Interest (Section 24) | Yes | No |
LTA (Leave Travel Allowance) | Yes | No |
Other Chapter VI-A Deductions | Yes | No |
Which Regime Should You Choose for FY 2024-25?
Choose the Old Tax Regime If:
- You invest in tax-saving instruments (PPF, ELSS, NPS, etc.).
- You claim HRA, home loan interest, or LTA benefits.
- Your total deductions exceed ₹3.5–4 lakh
Choose the New Tax Regime If:
- You don’t invest much in tax-saving schemes.
- Your income is between ₹7L–₹15L (lower tax rates may help).
- You prefer hassle-free tax filing without tracking deductions.
Final Decision: Old vs. New Regime?
- If deductions > ₹3.5L → Old Regime (More savings)
- If deductions < ₹3L → New Regime (Lower tax outgo)
Conclusion
The best regime depends on your income level, investments, and exemptions.
- Salaried professionals with HRA & investments → Old Regime
- Those with minimal deductions → New Regime