The changes in the new income tax regime have come into effect from April 1. Finance Minister Nirmala Sitharaman announced several changes in this regime on February 1, 2025. She made the tax zero on income up to Rs 12 lakh per annum. Along with this, changes were also made in the tax slabs. This has made the new regime attractive for most taxpayers. The question is, which regime is best for you between the new and old regime?
There is no tax on income up to Rs 12.75 lakh for salaried taxpayers
Dhruv Chopra, Managing Partner, Dewan PN Chopra & Co., said that the use of the new income tax regime in the new financial year i.e. 2025-26 can save a lot of tax for salaried taxpayers. Especially, this can benefit those taxpayers who do not take much advantage of deductions in the old regime. For example, in the new regime, there will be no tax on annual income up to Rs 12 lakh. If you are employed, then you will not have to pay tax on income up to Rs 12.75 lakh.
The biggest difference between the new and old tax regime is in terms of deduction
The biggest difference between the new and old regime is in the matter of deduction. Apart from this, there is also a difference in the limit of rebate available under section 87A. Chopra said that in the new regime, the tax rates are low, but deduction is not allowed. Apart from this, the tax slabs are also higher in the new regime. On the other hand, in the old regime, many types of deductions are available under many sections of the Income Tax Act, 1961. These include section 80C, section 80D, section 24B and HRA.
The new regime is relatively easy to use
JZCFO founder and CA Manish Mishra said that which regime is beneficial for you between the new regime and the old regime depends on whether the taxpayer makes tax-saving investments or not. If a taxpayer does not make tax-saving investments, has not taken a home loan or does not claim HRA, then he can use the new regime. It is easy to use. In this, taxpayers do not need to keep track of documents related to deductions.
The new regime allows deduction only under section 80CCD(2)
In the new tax regime, deduction on HRA, home loan interest, deduction under section 80C and deduction under section 80D is not allowed. In the new regime, deduction is available to salaried taxpayers only under section 80CCD (2). Under this, deduction is allowed on the employer's contribution to the employee's NPS account.
