Old vs New Tax Regime for FY 2024–25: Which is Better for Your ITR Filing in 2025?

As the Income Tax Return (ITR) filing season for FY 2024–25 (AY 2025–26) approaches, salaried individuals, professionals, and business owners face a crucial decision: Should you opt for the Old Tax Regime or switch to the New Tax Regime?

While the New Tax Regime is now the default, taxpayers still have the flexibility to choose. This guide compares the income tax slab rates, deductions, and benefits of both regimes, helping you decide what works best based on your financial goals.

📌 Old Tax Regime – FY 2024–25
Income Range 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 of ₹50,000 for salaried individuals
  • Section 80C: Up to ₹1.5 lakh (PF, PPF, ELSS, LIC, etc.)
  • Section 80D: Health insurance premium deduction
  • Additional exemptions: HRA, LTA, home loan interest, and more

Ideal for taxpayers with significant deductions and tax-saving investments.

📌 New Tax Regime – FY 2024–25 (Post-Budget 2024 Update)
Income Range 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%

✅ Key Features:

  • Standard Deduction increased to ₹75,000 (as per Budget 2024)
  • No exemptions or deductions allowed (except employer NPS contribution & Home loan interest on let-out property)
  • Section 87A Rebate: No tax for income up to ₹7 lakh

Perfect for those with fewer deductions and seeking a simplified tax process.

📊 Example: Income Tax Calculation for FY 2024–25
🎯 Assume both taxpayers have a gross income of ₹12,00,000
🔹 Taxpayer A – Opts for Old Regime:
  • Total Deductions: ₹2.5L (80C, 80D) + ₹50K standard
  • Taxable Income: ₹9,00,000
  • Tax Calculation:
    • ₹0 – ₹2.5L: Nil
    • ₹2.5L – ₹5L: 5% = ₹12,500
    • ₹5L – ₹10L: 20% on ₹4L = ₹80,000
    • Total: ₹92,500
    • Cess @4% = ₹3,700

✅ Total Tax = ₹96,200

🔹 Taxpayer B – Opts for New Regime:
  • Standard Deduction: ₹75,000
  • Taxable Income: ₹11,25,000
  • Tax Calculation:
    • ₹0 – ₹3L: Nil
    • ₹3L – ₹7L: 5% = ₹20,000
    • ₹7L – ₹10L: 10% = ₹30,000
    • ₹10L – ₹11.25L: 15% on ₹1.25L = ₹18,750
    • Total: ₹68,750
    • Cess @4% = ₹2,750

✅ Total Tax = ₹71,500

💡 Verdict: Taxpayer B under New Regime pays ₹24,700 less
🧮 How to Choose the Best Tax Regime for FY 2024–25?

🔹 Choose the Old Regime if:

  • • You claim deductions and exemptions exceeding ₹3.5 lakh
  • • You've invested in tax-saving instruments like ELSS, PPF, and insurance

🔹 Choose the New Regime if:

  • • You prefer simpler compliance with minimal paperwork
  • • You do not claim major deductions or exemptions

📝 Important Notes:

  • • Salaried employees can switch regimes every year while filing ITR
  • • Business/professional taxpayers can switch only once (as per section 115BAC)

📢 Final Word:

There’s no one-size-fits-all answer. Your ideal regime depends on your income structure, investments, and future plans. Use a trusted income tax calculator or consult your Chartered Accountant to evaluate your savings under both regimes.

📌 FAQs – Income Tax Regime Comparison (2025)

Q: What is the tax rate under the new regime for FY 2024–25?

A: The slab starts from Nil up to ₹3L and goes up to 30% for income above ₹15L.

Q: Can I switch between regimes each year?

A: Salaried individuals can switch every year. Business professionals can switch only once.

Q: Is standard deduction available under the new regime?

A: Yes. As per Budget 2024, ₹75,000 standard deduction is available.

Q: What is the maximum rebate available under section 87A in the new regime?

A: A full tax rebate is available if taxable income is up to ₹7,00,000.