ITR Income Tax Regimes: Old vs New for FY 2025

Certainly! Let’s delve into the comparison between the old and new income tax regimes for the financial year 2024-2025 (FY 2024-25). 📊

Old vs New Tax Regime: Which Is Better for Individual Salaried Employees and Professional?

The Budget 2023 introduced significant changes, leading to confusion among taxpayers regarding the choice between the old and new tax regimes. Here’s a breakdown of both regimes:

New Tax Regime:

  1. Tax Slabs and Rates:
    • The new tax regime introduced streamlined tax slabs:
      • 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%
    • Higher Tax Rebate Limit: Full tax rebate on income up to ₹7 lakhs (compared to ₹5 lakhs under the old regime).
    • Standard Deduction: The standard deduction of ₹50,000 is now available under both regimes.
    • Family Pension Deduction: Family pension recipients can claim a deduction of ₹15,000 or 1/3rd of the pension (whichever is lower).
    • Reduced Surcharge: The surcharge rate on income over ₹5 crores has been reduced from 37% to 25%.

Old Tax Regime:

  1. Tax Slabs and Rates:
    • The old tax regime has different tax slabs:
      • 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%
    • Exemptions and Deductions: Taxpayers can claim various exemptions and deductions (e.g., HRA, LTA, 80C, 80D, etc.).

Which Regime to Choose?

  • New Regime: Option for the new regime if you want simplified tax slabs, higher rebate limits, and the benefit of standard deduction.
  • Old Regime: Stick to the old regime if you have substantial exemptions and deductions that outweigh the benefits of the new regime.

Remember that the new regime is now the default option, but the old regime still exists. Evaluate your specific financial situation and make an informed decision based on your individual circumstances1. You can also use an Income Tax Calculator to compare both regimes2.

Feel free to explore more resources or consult a tax professional to determine the best approach for your tax planning! 📝🔍

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