Old tax regime:- The old tax regime refers to the system of income tax calculation and slabs that existed before the introduction of the new tax regime .The old regime is the tax system that prevailed before the introduction of the new regime.

Under this regime, there are over 70 exemptions and deductions available, including HRA and LTA, that can reduce your taxable income and lower tax payments.

New tax regime:- The New Tax Regime is a scheme of Income tax in India first proposed in Union Budget 2020–21.Budget of FY2021-22 did not see any major announcements in this regime. During the Budget 2022–23, reports emerged that New Tax Regime was getting poor response and Government is considering to make it more attractive among the taxpayers.

The new tax system is safer and more straightforward, with fewer records and less potential for tax evasion fraud.

Basic difference:- The tax slabs and rates are different in old and new tax regimes. Various deductions and exemptions are allowed in Old tax regime.

The new regime offers lower rates of taxes but permits limited deductions and exemptions.

Both old v/s new tax regime have benefits as well as drawbacks.

Before deciding, understand the differences between the old and new tax regimes. The previous tax structure instils in a taxpayer the habit of saving. The new tax structure benefits employees who earn less and invest less, resulting in fewer deductions and exemptions.

Benefits of taxes:- the income tax slab in India specify the applicable rates for different income brackets and vary based on residential status, age, and type of taxpayer. The applicable income tax slabs and rates may change each financial year based on government announcements.

The Old Tax Regime offers more than 70 deductions and exemptions to claims like Section 80C, HRA, LTA, and more. This regime is also called the existing tax regime. There is no change in old tax regime slab rate.

Old Regime (FY 2024-25):

The basic exemption limit for individuals above the age of 60 years and below 80 years under the old tax regime is Rs.3,00,000.

The basic exemption limit for individuals above the age of 80 years under the new tax regime is Rs.5,00,000.

If you find ITR filing complicated, you can get assistance from our tax experts and complete your

The new tax regime slab was introduced in Budget 2020, effective April 1, 2020. The new regime offers lower tax rates for higher incomes than the old tax regime. It allows you to lower your tax liability subject to certain conditions and is optional.

So, If you choose to calculate your taxes using the new tax regime, most of the deductions and exemptions available under the Income Tax Act 1961 would not be available to you.

However, with the Budget 2023 and Budget 2024, the government offered a few key changes in the new tax regime to make it more attractive:-

New Regime (FY 2024-25):

Enhanced standard deduction- the standard deduction for salaries employees has been increased to Rs. 75000 under the new regime

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Family pension- the deduction on family pension received has been increased from rate 15000 to 25000.

NPS contribution- the deduction limit on employer’s contribution to NPS has been increased to 14% from 10%.

As a result of the above changes a salaried employee in the new text regime can save up to rate 17,500 in Taxes.            

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