Old vs New Tax Regime 2025#
Quick Comparison#
| Feature | New Regime | Old Regime |
|---|---|---|
| Tax Rates | Lower | Higher |
| Standard Deduction | ₹75,000 | ₹50,000 |
| Deductions | Limited | All available |
| Default | Yes | No (opt-in) |
Deductions Available#
Old Regime
- Section 80C (₹1.5 lakh)
- Section 80D (₹1 lakh)
- HRA Exemption
- LTA
- Section 80E (Education loan)
- Home loan interest (Section 24)
- And many more
New Regime
- Standard deduction only
- No major deductions
- NPS additional ₹50,000 (Section 80CCD(1B))
Tax Calculation Example#
For ₹10 lakh income:
| Item | Old Regime | New Regime |
|---|---|---|
| Gross Income | ₹10,00,000 | ₹10,00,000 |
| Standard Deduction | ₹50,000 | ₹75,000 |
| 80C Deduction | ₹1,50,000 | - |
| Taxable Income | ₹8,00,000 | ₹9,25,000 |
| Tax | ₹1,10,500 | ₹91,300 |
| Tax Savings | - | ₹19,200 |
When to Choose Old Regime#
- Have high deductions (home loan, insurance, etc.)
- Total deductions > ₹3.25 lakh
- Want to save more tax
When to Choose New Regime#
- Have minimal deductions
- Want simpler tax filing
- Income above ₹12 lakh (get full rebate)
How to Switch#
- Can switch every year in ITR
- Employer defaults to new regime
- Must inform employer if choosing old