Key Differences Between New & Old Tax Regimes (FY 2024–25)
| Particulars |
New Tax Regime |
Old Tax Regime |
| Rebate u/s 87A |
INR 7,00,000 |
INR 5,00,000 |
| STCG (Section 111A) Rebate |
Not Available |
Available |
| LTCG (Section 112A) Rebate |
Not Available |
Available |
| Standard Deduction |
INR 75,000 |
INR 50,000 |
| House Rent Allowance (HRA) |
Not Available |
Available |
| Leave Travel Allowance (LTA) |
Not Available |
Available |
| 30% Additional Employee Cost (80JJAA) |
Available |
Available |
| Food Allowance |
Not Available |
Available |
| Professional Tax |
Not Available |
Available |
| Reimbursement of Office Expense |
Available |
Available |
| Home Loan Interest (Rent) |
Available |
Available |
| Home Loan Interest (Self-Occupied) |
Not Available |
Available |
| LIC / PPF / PF (Section 80C) |
Not Available |
Available |
| NPS Employee Contribution |
Not Available |
Available |
| NPS Employer Contribution |
Available (14% for all) |
Available (12% for Non-Govt, 14% for Govt) |
| Mediclaim (Section 80D) |
Not Available |
Available |
| Disabled Individual (Section 80U) |
Not Available |
Available |
| Education Loan (Section 80E) |
Not Available |
Available |
| EV Loan (Section 80EEB) |
Not Available |
Available |
| Donations (Section 80G/80GGC) |
Not Available |
Available |
| Savings Bank Interest (80TTA/80TTB) |
Not Available |
Available |
| Family Pension Deduction |
INR 15,000 |
INR 15,000 |
| VRS Exemption (10(10C)) |
Available |
Available |
| Gratuity Exemption (10(10)) |
Available |
Available |
| Leave Encashment (10(10AA)) |
Available |
Available |
| Transport for Specially-abled |
Available |
Available |
The New Tax Regime offers higher standard deduction and rebate threshold but fewer exemptions/deductions. Old Tax Regime allows more deductions/exemptions under various sections (80C, 80D, 80E, etc.) making it favorable for taxpayers who have significant investments and claims. NPS Employer Contribution is available in both regimes, but the New Regime allows 14% for all, compared to the old regime’s split limit (12% for non-govt and 14% for govt employees)
FAQ on 2 tax regimes to choose from: the old regime and the new regime.
Frequently Asked Questions regarding the two tax regimes in India: the old regime and the new regime:
Query: What is the old tax regime?
Responses:
- The old tax regime refers to the existing system of taxation in India, where taxpayers can avail various deductions and exemptions under different sections of the Income Tax Act, resulting in a higher number of tax-saving options.
Query: What is the new tax regime?
Responses:
- The new tax regime, introduced in the Union Budget, offers reduced income tax rates but with fewer deductions and exemptions. It aims to simplify the tax structure and lower the tax burden on taxpayers.
Query: Who can opt for the new tax regime?
Responses:
- Individual taxpayers and Hindu Undivided Families (HUFs) have the option to choose between the old and new tax regimes. This choice needs to be made each financial year.
Query: What are the key differences between the old and new tax regimes?
Responses:
- The old regime offers more deductions and exemptions, while the new regime has lower tax rates but fewer tax-saving options. Taxpayers need to evaluate which regime is more beneficial based on their individual financial circumstances.
Query: How do I choose between the old and new tax regimes?
Responses:
- Taxpayers should carefully assess their income sources, available deductions, and tax-saving investments to determine which regime suits them best. They can use tax calculators or consult tax professionals for guidance.
Query: Can I switch between tax regimes every year?
Responses:
- Yes, taxpayers have the flexibility to switch between the old and new tax regimes each financial year based on their changing financial situation and tax-saving preferences.
Query: Is it mandatory to file Form 10IE to opt for the new tax regime?
Responses:
- Yes, taxpayers who wish to opt for the new tax regime need to file Form 10IE to declare their choice before filing their income tax return for the relevant assessment year.
Query: Can I claim deductions under Chapter VI-A in the new tax regime?
Responses:
- No, deductions under Chapter VI-A (such as Section 80C, 80D, etc.) are not available in the new tax regime. Taxpayers opting for the new regime cannot claim these deductions.
Query: Which tax regime is better for me?
Responses:
- The choice between the old and new tax regimes depends on various factors like income level, investments, loans, and financial goals. Taxpayers should assess both regimes carefully to determine which one aligns better with their tax planning strategy.
Comparison of exemption/ deductions available under the old tax regime and new tax regime of Section 115BAC
Query: What is time limit to switch old to new income tax regime filing income tax Return Assessment Year 2024-25?
Responses:
The time limit to switch between the old and new income tax regime for filing income tax return for Assessment Year 2024-25 depends on your source of income:
1.If you are a salaried individual, you can switch between the regimes every year. The new tax regime will be the default option from F.Y. 2023-24, but you can opt for the old regime while filing your return before the due date, which is July 31, 2024 for non-audit cases.
2.If you have income from business or profession, you can switch between the regimes only once in your lifetime. You will have to file Form 10IE before July 31, 2024 to opt for the new regime, and you will not be able to switch back to the old regime in the future.
it clarifies that the option to choose between the old and new tax regimes for Individual and HUF taxpayers is provided under Section 115BAC of the Income Tax Act. Under this section, Individual and HUF taxpayers have the choice to opt for the new tax regime, and they are required to file Form 10IE to declare their choice before filing their tax return under section 139(1) of the Income Tax Act.
Form 10IE serves as the formal income tax declaration of the taxpayer’s choice to opt for the new tax regime under Section 115BAC. This ensures that their tax liability is computed according to the chosen regime when filing their tax return.
It’s important for taxpayers to carefully evaluate their options and consider their individual financial circumstances before making a decision on which tax regime to opt for.
Query: Is it possible for salaried employees to change tax regimes when filing their Income Tax Return?
Responses:
- Choosing Tax Regime with Employer: Salaried employees in India have two tax regimes to choose from: the old regime and the new regime. They inform their employer about their preferred regime for TDS purposes.
- Changing Tax Regime During Filing: Even if they chose a regime with their employer, they can switch regimes while filing their ITR. This means they have the flexibility to change their tax plan if needed.
- Understanding New Regime: The new tax regime, introduced in the Union Budget 2020, offers lower tax rates but eliminates many deductions and exemptions. Employees need to weigh the pros and cons before deciding which regime suits them best.
- Stick to Chosen Regime for the Year: Once an individual selects a tax regime for a financial year, they cannot change it during that year. This means they should carefully consider their financial situation and choose wisely.
- Switching Regimes During ITR Filing: Taxpayers can switch between regimes easily while filing their ITR. They simply need to choose their preferred regime (old or new) within the ITR form itself.
- Evaluating Benefits: It’s important to evaluate both regimes and consider factors like income and deductions before making a decision. This ensures that taxpayers can minimise their tax liability effectively.
ITR Forms for AY 2024-25 Ready
- Update: ITR-1, ITR-2, ITR-4, and ITR-6 now available for online and offline filing.
- Excel Utilities: Excel utilities for ITR-1, ITR-2, and ITR-4 and ITR-6 accessible via the e-filing portal.
- Why It Matters: Convenient options for taxpayers, simplifying tax filing processes.
- Next Steps: File your returns online or offline using the available forms and utilities.
- Link: https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns
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