🤔 Confused Between Old and New Tax Regimes? Here’s How to Choose the Right One Before Filing Your ITR
When it comes to filing your Income Tax Return (ITR), one of the most common questions people ask is:
“Should I go for the old tax regime or the new one?”
The answer depends on a few important factors like your income, deductions, and lifestyle.
Let’s break it down in a simple way so you can decide what works best for you.
🧾 What Are the Old and New Tax Regimes?
🔹 Old Tax Regime:
- Offers various deductions and exemptions like:
- ₹1.5 lakh under Section 80C (for investments like PPF, ELSS, LIC, etc.)
- HRA (House Rent Allowance)
- LTA (Leave Travel Allowance)
- Interest on home loan, medical insurance, etc.
- Tax slabs are slightly higher compared to the new regime.
🔹 New Tax Regime:
- Lower tax rates but with no major deductions or exemptions.
- Simple and clean – less paperwork, fewer calculations.
- Beneficial if you don’t invest much in tax-saving instruments.
🧮 Side-by-Side Tax Slab Comparison (FY 2024-25)
| Income Range | Old Regime (with deductions) | New Regime (no deductions) |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5 lakh – ₹5 lakh | 5% | 5% |
| ₹5 lakh – ₹7.5 lakh | 20% | 10% |
| ₹7.5 lakh – ₹10 lakh | 20% | 15% |
| ₹10 lakh – ₹12.5 lakh | 30% | 20% |
| ₹12.5 lakh – ₹15 lakh | 30% | 25% |
| Above ₹15 lakh | 30% | 30% |
Note: Tax rebate under Section 87A is available under both regimes for income up to ₹7 lakh (new) and ₹5 lakh (old).
✅ How to Decide Which One Is Better for You?
Here’s a simple thumb rule:
Choose Old Regime if:
- You claim deductions/exemptions over ₹3 lakh (80C, HRA, NPS, etc.)
- You have a home loan or education loan
- You are good at tax planning with investments
Choose New Regime if:
- You don’t want to deal with complex paperwork
- You don’t claim many deductions
- You are a salaried person with standard salary components only
🔧 Quick Tip: Use a Tax Calculator
Before filing, try a tax comparison calculator (available on the Income Tax Department website or trusted financial platforms).
Just input your income and deductions – it’ll instantly show which regime is better for you.
📌 Final Thoughts
There’s no one-size-fits-all answer.
The better regime depends on your unique income, expenses, and lifestyle. So take a little time, crunch some numbers, and choose wisely.
And yes – you can choose a different regime every year (unless you have business income).
Need help calculating which regime saves you more tax? Drop your salary and deductions, and I’ll help you compare! 💡
📌 Disclaimer
The information provided in this blog is for general guidance and educational purposes only. It should not be considered as professional tax advice or legal opinion. For personalized assistance based on your individual or business tax situation, please consult with a qualified tax consultant or reach out to KVSTAX CONSULTANCY directly.