From FY 2020-21, taxpayers can choose between two tax regimes: the Old Regime (with deductions and exemptions) and the New Regime (lower slab rates but no major deductions).

Old Tax Regime:

• Allows deductions under:

  • Section 80C (LIC, PPF, ELSS, etc.)

  • Section 24(b) (Home Loan Interest)

  • HRA, LTA, and standard deduction

• Higher tax slabs

New Tax Regime (FY 2024-25 Slabs):

• Income 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%

• No major deductions allowed except for:

  • NPS employer contribution

  • Standard deduction (?50,000 for salaried from AY 2024-25)

  • EPF & gratuity exemptions

Which to Choose?

• If you have high deductions (above ?2.5 lakh), old regime may be better.

• If you don’t claim many deductions, new regime offers better net savings.