As the new financial year 2024-25 begins, Indian taxpayers are once again faced with the critical decision: Old Tax Regime or New Tax Regime? With revised tax slabs and a focus on simplification, the New Regime is being promoted by the government—but is it right for everyone?
In this blog, we break down the key differences, updated slabs, benefits, drawbacks, and provide a clear comparison to help you choose wisely.
1. What is the Old Tax Regime?
The Old Tax Regime allows taxpayers to claim various exemptions and deductions such as:
- Section 80C (₹1.5 lakh) for investments in PPF, LIC, ELSS, etc.
- HRA (House Rent Allowance)
- Standard Deduction
- Section 80D, 80E, 24(b), and more.
Old Regime Slabs for FY 2024-25:
| Income Slab | Tax Rate |
| Up to ₹2.5 lakh | Nil |
| ₹2.5 – ₹5 lakh | 5% |
| ₹5 – ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Senior Citizens: Higher exemption limits apply (Up to Rs 3 Lakh Nil)
2. What is the New Tax Regime?
Introduced in Budget 2020 and updated in Budget 2023, the New Tax Regime offers lower tax rates but no major exemptions or deductions.
New Regime Slabs for FY 2024-25:
| Income Slab | Tax Rate |
| Up to ₹3 lakh | Nil |
| ₹3 – ₹6 lakh | 5% |
| ₹6 – ₹9 lakh | 10% |
| ₹9 – ₹12 lakh | 15% |
| ₹12 – ₹15 lakh | 20% |
| Above ₹15 lakh | 30% |
Standard Deduction of ₹50,000 is now allowed (from FY 2023-24 onward).
Rebate under Section 87A increased to ₹7 lakh (zero tax if income ≤ ₹7 lakh).
3. Old vs. New Regime: Key Differences
| Criteria | Old Regime | New Regime |
| Deductions Allowed | Yes | Limited |
| Tax Slabs | Higher | Lower |
| Complexity | High (many calculations) | Simple |
| Best for | High investments | Low/no investments |
Example:
A salaried person with ₹10 lakh income and ₹2 lakh deductions will save more in the Old Regime.
But someone with fewer deductions may benefit under the New Regime due to lower tax rates.
4. Who Should Choose Which Regime in FY 2024-25?
- Choose Old Regime if:
- You claim high deductions under 80C, HRA, and 80D.
- You invest in PPF, insurance, ELSS, or pay education loan.
- Choose New Regime if:
- You don’t have many tax-saving investments.
- You want a simpler tax process.
🔁 You can change your regime every year (if you are salaried).
5. How to Choose the Right Tax Regime?
Use online Tax Regime Calculators or consult a tax expert. Consider:
- Your total income
- Your eligible deductions
- Future investment plans
Conclusion
The choice between Old and New Tax Regime in FY 2024-25 depends on your income, deductions, and financial goals. While the New Regime is default and simpler, the Old Regime can still offer more savings if you’re an active investor. 📌 Pro Tip: Review your payslip and Form 16 to evaluate what deductions you’re eligible for before making the final decision.
FAQs – Old vs. New Regime (FY 2024-25)
1. Is the New Tax Regime mandatory in FY 2024-25?
No, it’s the default option, but you can opt for the Old Regime.
2. Can I switch regimes every year?
Salaried individuals can switch every year; business professionals can switch only once.
3. Does the New Regime allow 80C deductions?
No, 80C is not applicable under the New Regime.
4. Is the rebate under Section 87A available in both regimes?
Yes, but the limit differs. In New Regime, it’s up to ₹7 lakh; in Old, it’s ₹5 lakh.