Old vs New Tax Regime: Which One Should You Choose in FY 2024–25?
Choosing the old vs new tax regime has become a crucial decision for Indian taxpayers in FY 2024–25. With different slabs, deductions, and savings potential, selecting the right option can impact your annual tax outgo.
In this blog, we’ll decode both regimes in simple terms — so you can make an informed, smart tax choice.
What’s the Difference Between Old and New Tax Regime?
The old tax regime allows taxpayers to claim deductions and exemptions (like HRA, 80C, 80D, etc.), while the new tax regime offers lower tax rates but disallows most exemptions.
Here’s a quick comparison:
| Particulars | Old Regime | New Regime (Default from AY 2024–25) |
|---|---|---|
| Tax Slabs | Higher | Lower |
| Standard Deduction (Salary/Pension) | ₹50,000 | ₹50,000 (from AY 2024–25) |
| Section 80C Deduction | Available (up to ₹1.5 lakh) | Not available |
| HRA/Leave Travel, etc. | Allowed | Not allowed |
| Rebate under 87A (for lower income) | Up to ₹5L taxable income = NIL tax | Up to ₹7L taxable income = NIL tax |
| Opt-in Method | Default unless opted out | Default regime (unless old chosen) |
🔗 Read our guide on tax-saving options under Section 80C →
FY 2024–25 Income Tax Slabs: Old vs New
New Regime Slabs (Default for AY 2025–26):
| Income Slab (₹) | Tax Rate |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 – 6,00,000 | 5% |
| 6,00,001 – 9,00,000 | 10% |
| 9,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Old Regime Slabs:
| Income Slab (₹) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Which Regime Saves You More Tax?
Here’s a simple example to compare both regimes for a salaried person earning ₹10 lakh annually:
Scenario A: With deductions (Old Regime)
- Standard Deduction: ₹50,000
- 80C (PF, LIC, ELSS, etc.): ₹1,50,000
- 80D (Health Insurance): ₹25,000
- Net taxable income: ₹7,75,000
- Tax: Approx. ₹65,000 (after rebate/calc)
Scenario B: No deductions (New Regime)
- Standard Deduction only: ₹50,000
- Net taxable income: ₹9,50,000
- Tax: Approx. ₹54,600
✅ Verdict: If you’re claiming more than ₹2.5 lakh in deductions, old regime may save you more.
🚫 But if you don’t invest much or want less paperwork — the new regime is cleaner and simpler.
Expert View: Don’t Just Look at Tax — Look at Habits
“The old regime encourages long-term saving habits via PPF, ELSS, insurance. The new regime suits freelancers, new earners, or those with fewer deductions.”
— CA Ramesh Nair, Tax Consultant
Legal Updates & CBDT Clarification
- As per Finance Act, 2023, the new regime is the default tax regime from AY 2024–25.
- You can still opt for the old regime while filing ITR — use Form 10-IEA if you’re a business professional (Section 115BAC(6)).
📜 Source: CBDT Notification No. 43/2023 dated 21.06.2023
How to Choose the Right Regime?
Use this simple checklist:
Choose old regime if:
- You claim HRA, 80C, 80D, home loan interest
- You’re a medical expenses
- You’re a salaried employee with rent and investments
Choose new regime if:
- You don’t invest in tax-saving instruments
- You prefer lower rates and less documentation
- You are a consultant/freelancer with few deductions
Final Thoughts
There is no one-size-fits-all answer to the old vs new tax regime debate. The best regime depends on your income, investments, and lifestyle choices.
Before filing your ITR for AY 2025–26, do a quick tax comparison using Efiletax’s Tax Calculator.
FAQs: Old vs New Tax Regime
Q1. Can I switch tax regimes every year?
Yes, salaried individuals can switch every year. Business owners can switch only once unless income ceases.
Q2. Is Form 10IEA mandatory for salaried taxpayers?
No. It’s only required for business/professional income under Section 115BAC(6).
Q3. Which tax regime is better for pensioners?
If you claim deductions (80D, 80TTB), old regime is likely better.
Ready to file your ITR?
Don’t stress over which regime to pick. Let our experts guide you.
👉 File ITR Online with Efiletax Now
Summary
Old vs New Tax Regime: Wondering which regime saves you more in FY 2024–25? Compare slabs, deductions, and income brackets in this simple guide. Know when to opt for old vs new, with updated rules, expert tips, and CBDT clarifications. Choose smart, save better with Efiletax.