How to Choose between Old and New Tax Regime

In FY 2024-25, you have two options – to choose between Old and New Tax Regime. The tax slab rates of new tax regime are low compared to old tax regime, but old regime provides you with multiple deductions to save income tax. It all depends on your income and investments whether to choose between old and new tax regime. If you make investments or claim maximum deductions than old tax regime might be better for you, else new tax regime will be better with low income tax.

Let us understand this in more detail.

Table of Contents

How to Choose between old and new tax regime video
Old vs New Tax Regime Calculation Table
Old Tax Regime Slab Rates FY 2024-25
New Tax Regime Slab Rates FY 2024-25
Deductions in Old Tax Regime
- 20 Deduction options to Save Income Tax with Old Tax Regime Video
Deductions in New Tax Regime
Comparison between Old and New Tax Regime
Conclusion

How to Choose between old and new tax regime video

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Old vs New Tax Regime Calculation Table

Here’s the table of comparison of income tax with old and new tax regime considering maximum investments of Rs. 4 Lakh with old tax regime:

As seen above, new tax regime becomes better when your gross income is above Rs. 11 Lakh with maximum investments of Rs. 4 lakh. If you can increase the investment amount to claim deduction than you can use the fincalc blog income tax calculator to check which tax regime is better for you.

Old Tax Regime Slab Rates FY 2024-25

Let us see what are the tax slab rates with old tax regime in FY 2024-25 for age below 60 years:

Income	Tax Slab Rates (Old Tax Regime)
Rs. 0 – Rs. 2.5 Lakh	0%
Rs. 2.5 Lakh – Rs. 5 Lakh	5%
Rs. 5 Lakh – Rs. 10 Lakh	20%
Rs. 10 Lakh or above	30%

As seen above, with old tax regime you don’t have to pay tax on income up to Rs. 2.5 lakh in financial year. However, you also get Tax Rebate 87A relief of maximum Rs. 12,500 when your taxable income is below Rs. 5 lakh in financial year. This helps you to pay zero income tax.

For senior citizens of age above 60 years, the basic exemption limit is Rs. 3 lakh in financial year and for super senior citizens, the basic exemption limit is lakh in financial year.

New Tax Regime Slab Rates FY 2024-25

Let us now understand the tax slab rates with new tax regime:

Income	Tax Slab Rates (New Tax Regime)
Rs. 0 – Rs. 3 Lakh	0%
Rs. 3 Lakh – Rs. 7 Lakh	5%
Rs. 7 Lakh – Rs. 10 Lakh	10%
Rs. 10 Lakh – Rs. 12 Lakh	15%
Rs. 12 Lakh – Rs. 15 Lakh	20%
Rs. 15 Lakh or above	30%

As seen above, the tax slab rates with new tax regime are reduced compared to old tax regime. This helps you to pay less income tax compared to old regime, But it comes with the expense of not claiming maximum of deductions to save additional income tax.

Let us see which are the deductions allowed in old and new tax regime.

Deductions in Old Tax Regime

There are multiple deductions allowed in Old tax regime as mentioned below:

Section 80C – This is the popular section including EPF (Employee Provident Fund), PPF (Public Provident Fund), Life insurance premiums, 5 years Fixed Deposit, ELSS (Equity Linked Saving Scheme), etc. This section allows you to claim up to Rs. 1.5 Lakh in a financial year to save income tax
Section 80CCD(1B) – This section includes voluntary contribution to NPS (National Pension System), with deduction limit of Rs. 50,000
Section 80D – This includes Medical Insurance premium paid by for self, family and parents. Senior citizen medical insurance will have the limit up to Rs. 50,000 in a financial year

There are many other sections using which you can save income tax with old tax regime. You can find the Complete Old Tax Regime Deductions list here

Also watch below video to know more about 20 deduction options to save income tax:

20 Deduction options to Save Income Tax with Old Tax Regime Video

Deductions in New Tax Regime

Below are some of the deductions you can claim with new tax regime:

Standard Deduction of Rs. 75,000 is available under New Tax Regime from FY 2024-25
Transport allowance can be claimed in case of specially-abled person
Conveyance allowance for employees received to meet conveyance expenditures
Compensation received for cost of travel or tour
Daily Allowance received as compensation for cost of living in some other place compared to regular place of working
Deduction for employer’s contribution in NPS Account under Section 80CCD(2)
Home Loan Interest amount under Section 24 in case of let-out property
Deduction of amount paid or deposited in Agniveer Corpus Fund under Section 80CCH(2)
Gifts up to Rs. 5000
Exemption on voluntary retirement 10(10C), gratuity u/s 10(10) and Leave encashment u/s 10(10AA)

Comparison between Old and New Tax Regime

Below is the table showing the comparison between old and new tax regime with their differences:

Old Tax Regime	New Tax Regime
High Tax Slab Rates	Low Tax Slab Rates
Standard Deduction = Rs. 50,000 for Salaried employees and pensioners	Standard Deduction = Rs. 75,000 for Salaried employees and pensioners
Basic exemption limit = Rs. 2.5 Lakh	Basic exemption limit = Rs. 3 Lakh
ZERO Income Tax up to Rs. 5 Lakh Taxable Income	ZERO Income Tax up to Rs. 7 Lakh Taxable Income
Tax Rebate 87A limit is Rs. 12,500	Tax Rebate 87A limit is Rs. 20,000
No Marginal Relief available	Marginal Relief available on taxable income above Rs. 7 lakh
Maximum deductions allowed to save income tax	Deductions allowed are very less to save income tax
Encourages investments or savings while saving income tax	Does not encourage savings or investments

Old vs New Tax Regime comparison and differences

Conclusion

So to conclude, old tax regime might be better for you if you make required amount of investments that help you to save income tax. Otherwise new tax regime will be better as it provides low tax slab rates compared to old tax regime.

It all depends on your income and investments you make in a financial year that will ultimately help you to calculate your tax liability. You can use the fincalc blog income tax calculator to know more about your income tax.

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Income Tax Calculator App – FinCalC

For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.

What you can do with this mobile App?

Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
Enter estimated Investments to check income tax with Old and New Tax Regime
Save income tax details and track regularly
Know how much to invest more to save income tax
More calculators including PPF, SIP returns, Savings account interest and lot more

Download Income Tax Calculator APP from play store

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