Old vs New Tax Regime: Which One Should You Choose Before Filing Your ITR?

As the financial year has ended, it’s time to prepare to file your income tax return (ITR) before the deadline of July 31, 2025. One of the key decisions you’ll need to make is whether to go with the old tax regime or the new tax regime. Here’s a simple guide to help you understand the differences and choose the one that works best for you.

Difference in Tax Slabs (FY 2024-25)

New Tax Regime

• No tax on income up to ₹7 lakh (after rebate under Section 87A)

• Slab-wise tax rates:
  • Up to ₹3 lakh – Nil

  • ₹3 lakh to ₹7 lakh – 5%

  • ₹7 lakh to ₹10 lakh – 10%

  • ₹10 lakh to ₹12 lakh – 15%

  • ₹12 lakh to ₹15 lakh – 20%

  • Above ₹15 lakh – 30%
    

Old Tax Regime

• Up to ₹2.5 lakh – Nil

• ₹2.5 lakh to ₹5 lakh – 5%

• ₹5 lakh to ₹10 lakh – 20%

• ₹10 lakh to ₹50 lakh – 30%
  

What About Standard Deduction?

• Old Regime: Standard deduction is ₹50,000

• New Regime (FY 2024–25): Now increased to ₹75,000

Know More ITR Filing for AY 2025-26: When Will Income Tax Return Filing Begin? Here’s What Taxpayers Need to Know. 

Deductions: What You Can and Can’t Claim

Old Regime:
Allows deductions under many sections like:

• Section 80C (Investments like PPF, ELSS)

• Section 80D (Health insurance)

• Section 80G (Donations)

• Section 80DD (Disability support)
  

New Regime:
Most of these deductions are not allowed. However, you can still claim:

• 80CCD(2): Employer contribution to NPS

• 80CCH: Contribution to Agniveer Corpus Fund

• 80JJAA: Deduction for new employees (for businesses)

Do You Have to Choose the New Regime?

• The new tax regime is the default option.

• If you want to stay with the old regime, you must opt for it specifically while filing your ITR.

Which Tax Regime Should You Pick?

• It depends on your income and how much you invest in tax-saving options.

• If you don’t claim many deductions, the new regime might save you more tax.

• If you invest a lot in 80C, pay insurance premiums, or donate, the old regime may offer better tax benefits.

Choosing the right regime can help you reduce your tax liability smartly. Always plan based on your income, lifestyle, and financial goals.

Conclusion

Deciding between the old and new tax regimes doesn’t have to be confusing. Review your income, savings, and eligible deductions before choosing. If in doubt, use an income tax calculator or consult a tax expert. Making the right choice now can lead to significant savings later.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.     

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.