Posted on April 17, 2025, by Niftynews
As the new financial year 2025-26 kicks off, one of the key decisions taxpayers must make is whether to file under the old vs new tax regime. With the income tax return (ITR) deadline set for July 31, understanding the pros and cons of each system could save you a significant amount in taxes.
🔍 What’s the Difference Between the Old vs New Tax Regime?
The new tax regime was introduced to simplify taxation by offering lower income tax slab rates—but it comes with a catch: you cannot claim most deductions that are available under the old regime.
Here’s a quick breakdown:
📜 Old Tax Regime
- Allows you to claim deductions under sections 80C, 80D, 80DD, HRA, LTA, home loan interest, and many more.
- Ideal for those who make tax-saving investments and have eligible expenses.
🚫 New Tax Regime
- Offers lower tax rates, but most exemptions and deductions are not allowed.
- Only limited deductions like 80CCD(2) (employer contribution to NPS), 80CCH, and 80JJAA (for new employment) are permitted.
- Standard deduction of ₹75,000 (higher than old regime’s ₹50,000) is available.
🧠 Which Income Tax Regime Should You Choose?
The best tax regime for you depends on your income profile, lifestyle, and investments.
✔️ Choose the New Tax Regime if:
- You don’t claim many deductions or don’t invest in tax-saving instruments.
- Your salary is structured without HRA or other tax exemptions.
- You’re in a higher tax bracket and want the benefit of lower slab rates with minimal documentation.
✔️ Choose the Old Tax Regime if:
- You invest in PPF, ELSS, KVP, or other tax-saving tools.
- You pay premiums for health insurance and claim deductions under Section 80D.
- You live in a rented house and claim HRA.
- You are eligible for home loan interest deductions or education loan interest.
🆕 What’s New in FY 2025-26?
Finance Minister Nirmala Sitharaman announced in Budget 2025 that income up to ₹12 lakh will be tax-free under the new regime. However, these changes will apply only when you file your return for FY 2025-26 next year in 2026.
For FY 2024-25 (which you’re filing now), you’ll follow the rules announced in Budget 2024.
💸 Standard Deduction: Old vs New Tax Regime
There’s a notable difference here:
| Regime | Standard Deduction |
|---|---|
| Old Tax Regime | ₹50,000 |
| New Tax Regime | ₹75,000 |
The new tax regime now offers a slightly higher deduction benefit for salaried individuals and pensioners.
❓ Is the New Tax Regime Mandatory?
No. While the new regime is the default option under the Income Tax Act, you are free to choose the old tax regime if it benefits you. Just make sure you opt for it explicitly when filing your return.
⚖️ Need Help Deciding? Use an Income Tax Calculator
Still unsure? You can use an online income tax calculator that compares your tax liability under both regimes.
👉 Click here to access the tax calculator (replace with actual calculator link)
By entering your income details, deductions, and allowances, you can find out which regime helps you save more.
📆 Important Dates to Remember
- Financial Year: April 1, 2025 – March 31, 2026
- ITR Filing Deadline: July 31, 2025
- Default Regime: New Tax Regime
- To Opt for Old Regime: You must manually select it when filing your ITR
✅ Summary: Old Tax Regime vs New Tax Regime – A Quick Guide
| Criteria | Old Tax Regime | New Tax Regime |
|---|---|---|
| Tax Rates | Higher | Lower |
| Deductions & Exemptions | Available | Mostly Not Allowed |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Best For | Deduction-heavy cases | Simple salary structures |
👥 Who Benefits Most?
- Young professionals with fewer investments may benefit more under the new tax regime.
- Middle-income families and salaried individuals using full deductions under 80C, 80D, and HRA may still find the old regime more beneficial.
📝 Final Word
Choosing between the old vs new tax regimes isn’t a one-size-fits-all decision. It requires a bit of planning and a good understanding of your income, expenses, and financial goals.
Evaluate your tax-saving investments, check your eligibility for deductions, and use a reliable tax calculator to make an informed decision. If needed, consult a tax expert to maximize your savings.
