As the Income Tax Department continues to nudge taxpayers toward the New Tax Regime, many are confused about which one to choose for FY 2024-25 (AY 2025-26). Let’s explore the major differences and help you make an informed decision based on your income and deductions.

Key Differences at a Glance

Feature	Old Regime	New Regime (Default from FY 24-25)
Basic Exemption Limit	₹2.5 lakh (non-senior)	₹3 lakh
Tax Rates	Slab-based + cess	Lower slab rates
Deductions Allowed	80C, 80D, HRA, LTA, etc.	Not available (except few)
Standard Deduction	₹50,000 allowed	Now available (from FY 23-24)
Rebate under 87A	For income up to ₹5 lakh	For income up to ₹7 lakh

Tax Slabs Comparison

🔹 Old Regime Slabs (Non-Senior Citizens)

– 0 – ₹2.5 lakh: Nil

– ₹2.5 lakh – ₹5 lakh: 5%

– ₹5 lakh – ₹10 lakh: 20%

– ₹10 lakh and above: 30%

🔹 New Regime Slabs (FY 2024-25)

– 0 – ₹3 lakh: Nil

– ₹3 – ₹6 lakh: 5%

– ₹6 – ₹9 lakh: 10%

– ₹9 – ₹12 lakh: 15%

– ₹12 – ₹15 lakh: 20%

– Above ₹15 lakh: 30%

Who Should Choose Which Regime?

✅ Choose Old Regime if:

– You claim deductions under 80C, 80D, HRA, LTA, home loan interest

– Your total deductions exceed ₹2.5 lakh

– You’ve made tax-saving investments (PPF, ELSS, insurance)

✅ Choose New Regime if:

– You don’t claim major deductions

– Your salary is mostly taxable with few exemptions

– You want simplified filing and lower slab rates

Examples for Better Clarity

Example 1: Income ₹10 lakh, claiming ₹2.5 lakh in deductions

– Old Regime Tax: Around ₹54,600

– New Regime Tax: ₹62,400

➡️ Old Regime is better

Example 2: Income ₹8 lakh, no deductions

– Old Regime Tax: ₹46,800

– New Regime Tax: ₹31,200

➡️ New Regime wins

Changes in Budget 2023 (Still Relevant in 2025)

– New regime is now default if no option chosen

– Standard deduction of ₹50,000 allowed in New Regime

– Rebate under section 87A raised to ₹7 lakh income limit in New Regime

How to Opt for the Regime?

– Salaried: Inform employer at the start of financial year

– Others: Choose while filing ITR

– You can switch every year (except for those with business income)

FAQs

• Q1. Is the new tax regime mandatory from FY 2024-25?

No, it’s the default. You can still opt for the old regime.

• Q2. Can I change regimes every year?

Yes, unless you have business or professional income (then change is allowed only once).

• Q3. What deductions are still allowed in the New Regime?

– Employer’s NPS contribution (Sec 80CCD(2))
– Agniveer Corpus Fund (80CCH)
– Standard deduction of ₹50,000 (from FY 23-24)

• Q4. Which regime is better for pensioners?

It depends on their deductions. Many with low expenses may benefit from the new regime.