Old tax vs new regime: Which is better for you? A comparison after Union Budget 2025

Old tax vs new regime: Which is better for you? A comparison after Union Budget 2025

Old tax vs new regime: Which is better for you? A comparison after Union Budget 2025 ByHT News Desk Feb 02, 2025 09:05 PM IST Share Via Copy Link Under the proposed Union Budget 2025, a ₹60,000 rebate applies to incomes up to ₹12 lakh, enhancing the attractiveness of the new tax regime. 

The income tax slabs proposed in the Union Budget 2025 under the new tax regime include a ₹60,000 rebate for income up to ₹12 lakh ( ₹12.75 lakh for salaried individuals) under Section 87A.

Budget 2025 offers ₹60,000 rebate for incomes up to ₹12 lakh under new tax regime. (Representational image)(REUTERS)

This makes the old tax regime, which has 5 per cent, 20 per cent, and 30 per cent slabs and allows deductions for tax-saving investments, less attractive in comparison.

According to a report by The Times of India, the finance ministry has consistently supported the idea of separating investment and savings schemes from income tax liabilities, allowing taxpayers to make independent choices based on their own benefits.

The new tax regime offers more benefits than the old one for incomes up to ₹12 lakh ( ₹12.75 lakh for salaried individuals), even when utilising the full deductions and exemptions of ₹5,75,000 and 30 per cent of salary as house rent allowance.

However, it’s unlikely for someone earning ₹12.75 lakh to invest in tax-saving schemes, claim house rent allowance ( ₹3,82,500), and take the standard deduction, adding up to ₹9,57,000, The Economic Times reported.