New vs Old Tax Regime 2024–25: Which One Saves You More?

New Income Tax Slabs for FY 2024-25

What You Need to Know.

The Indian government has revised the income tax slabs for the Financial Year 2024–25 (Assessment Year 2025–26) with a focus on simplifying taxation and providing relief to the middle class. Let’s break down what’s new under both the New Tax Regime and the Old Tax Regime, and how it impacts your earnings.

New Tax Regime (Default Regime for FY 2024–25)

The New Tax Regime has become the default option starting this financial year. It features reduced tax rates but fewer deductions and exemptions. If you're someone who doesn't heavily invest in tax-saving instruments, this might be beneficial for you.

Income Tax Slabs Under New Regime:

Annual Income               Tax Rate

Up to ₹3,00,000                     Nil

₹3,00,001 – ₹7,00,000            5%

₹7,00,001 – ₹10,00,000         10%

₹10,00,001 – ₹12,00,000       15%

₹12,00,001 – ₹15,00,000        20%

Above ₹15,00,000                 30%

Old Tax Regime (Optional)

While the New Regime is the default, the Old Tax Regime remains available for those who prefer to claim various exemptions and deductions (such as HRA, 80C, 80D, etc.).

Tax Slabs Under Old Regime:

For Individuals Below 60 Years:

Annual Income                        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%

Key Benefits:

• Standard Deduction: Increased to ₹75,000 for salaried individuals and pensioners.

• Rebate (Section 87A): Taxpayers with income up to ₹7,00,000 get a rebate of up to ₹25,000, making their net tax zero.

• No age-based slab differences – one rate for all individuals.

• Surcharge & Cess: 4% Health & Education Cess is applicable.

For Senior Citizens (60–80 Years):

Annual Income                 Tax Rate

Up to ₹3,00,000                      Nil

₹3,00,001 – ₹5,00,000             5%

₹5,00,001 – ₹10,00,000           20%

Above ₹10,00,000                   30%

For Super Senior Citizens (80+ Years):

Annual Income               Tax Rate

Up to ₹5,00,000                      Nil

₹5,00,001 – ₹10,00,000          20%

Above ₹10,00,000                   30%

Key Benefits:

• Deductions under Sections 80C, 80D, HRA, etc.

• Rebate under Section 87A still available for income up to ₹5,00,000 (₹12,500 rebate).

• Useful for those with large tax-saving investments or housing loans.

Choosing Between New & Old Regimes

By default, taxpayers will be under the New Regime. However, if you wish to continue with the Old Regime, you must opt in explicitly by filing Form 10-IEA before submitting your Income Tax Return.

Tip:

If you have substantial investments in tax-saving instruments or claim housing loan interest, the Old Regime might result in lower tax liability.

Pro Tip: Use an income tax calculator for FY 2024-25 to compare both regimes before filing.

Conclusion

With the updated tax slabs, the government aims to boost disposable income, especially for the middle class, and simplify tax compliance. Whether you choose the new or old regime depends on your income, deductions, and financial planning.

Before filing your returns, run the numbers for both regimes or consult a tax expert to make the best choice for your situation.

FAQs About Income Tax FY 2024–25

Q1. Which tax regime is better in 2024–25? A: It depends on your deductions. If you claim fewer deductions, the New Regime is better. Otherwise, the Old Regime could save you more.

Q2. Can I switch regimes every year? A: Yes, salaried individuals can switch every year. Business owners can switch only once unless specific conditions are met.

Q3. What is the deadline for filing ITR for FY 2024–25? A: The expected deadline is 31st July 2025, unless extended by the government.