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Income Tax
Old vs New Tax Regime Comparison (FY 2024-25 / AY 2025-26)
The New Tax Regime offers lower concessional tax slabs with a ₹75,000 standard deduction and full tax rebate up to ₹7.75 Lakhs, while the Old Tax Regime lets you claim HRA, Home Loan Interest (Sec 24b), 80C (₹1.5L), and 80D medical insurance.
Default Choice
New Tax Regime (Sec 115BAC)
Default, Simplified & Zero-Paperwork Regime
Expected ReturnNil Tax up to ₹7.75 Lakhs CTC
Risk LevelNil (Statutory Law)
Lock-InZero Investment Lock-in Required
TaxabilitySlabs from 5% to 30% (Standard Deduction ₹75k)
Pros
- Zero income tax on taxable income up to ₹7,00,000 (Rebate 87A)
- Enhanced Standard Deduction of ₹75,000 for salaried employees
- No requirement to lock money in insurance or 80C lock-ins
- Simple ITR filing with zero audit query hassles
High Deductions
Old Tax Regime
Deduction-Heavy Structure for Homeowners & Investors
Expected ReturnBeneficial if Deductions > ₹3.75 Lakhs
Risk LevelNil (Statutory Law)
Lock-InRequires 3-15 Yr Lock-in (PPF/ELSS/NPS)
TaxabilitySlabs: 5%, 20%, 30% (Standard Deduction ₹50k)
Pros
- Full deduction for HRA (House Rent Allowance)
- Up to ₹2,00,000 deduction on Home Loan Interest under Section 24(b)
- ₹1,50,000 Section 80C + ₹50,000 NPS 80CCD(1B) + ₹75,000 80D
- Maximum tax savings for high earners with major commitments
Detailed Parameter Comparison Matrix
| Parameter | New Tax Regime (Sec 115BAC) | Old Tax Regime | Winner |
|---|---|---|---|
| Zero Tax Threshold | ₹7,75,000 (Salaried) | ₹5,50,000 (Salaried) | New Tax Regime (Sec 115BAC) |
| Standard Deduction | ₹75,000 (Budget 2024) | ₹50,000 | New Tax Regime (Sec 115BAC) |
| HRA Exemption | Not Allowed | Full Exemption under Sec 10(13A) | Old Tax Regime |
| Home Loan Interest (24b) | Not Allowed | Up to ₹2,00,000 Deduction | Old Tax Regime |
| Cash Flow Freedom | 100% (No forced lock-in) | Forced into 80C lock-ins | New Tax Regime (Sec 115BAC) |