In Budget 2024, Finance Minister Nirmala Sitharaman introduced changes to the income tax slabs to make the new tax regime more appealing to taxpayers. However, she announced no such perks in the July 2024 Budget for those who opted for the old tax regime.
Income tax slab for FY 2024-25: Old tax regime
1) Income up to ₹2.5 is exempt from taxation.
2) Income between ₹2.5 to ₹5 lakh is taxed at 5 per cent.
3) Personal income from ₹5 lakh to ₹10 lakh is taxed at a rate of 20 per cent.
4) Personal income above ₹10 lakh is taxed at a rate of 30 per cent.
Old tax regime vs new tax regime: Key differences
The old regime allows you to claim various deductions and exemptions (eg, under Section 80C, 80D, HRA). The new regime forgoes most of these.
Old tax regime vs new tax regime: Standard deduction
The standard deduction for salaried individuals has been increased to ₹75,000 in the new regime. The standard deduction limit for family pensioners is hiked to ₹25,000 under the new tax regime.
The standard deduction is a flat deduction of Rs. 50,000 under the old tax regime.
Which is better—the old tax regime or the new tax regime?
Money experts say that depending on your situation, the old tax regime could be more advantageous if you take advantage of many deductions and exemptions.
However, they say that the new income tax regime can be preferred if you don’t make many tax-saving investments or have no eligible deductions.
New vs old tax regime: Can I claim HRA exemption in the new regime?
Under the old tax regime, House Rent Allowance (HRA) is exempted under section 10(13A) for salaried individuals. However, this exemption is not available in the new tax regime.
New vs old tax regime: How to decide?
Calculate your taxable income under both regimes. Take into account all your income and applicable deductions/exemptions. Use an online tax calculator or consult a tax advisor.
New vs old tax regime? What senior citizens should choose?
In the old tax regime, the basic exemption limit for senior citizens was ₹3 lakh and for super senior citizens, it was ₹5 lakh.
In the new tax regime, no income tax is payable up to a total income of ₹7 lakh.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.
