New vs Old Tax Regime: Difference, Which is Better, Exemptions, Deductions, Sections, Tax Slabs, Calculator

When it comes to filing income tax returns, taxpayers in India now have two options: the Old Tax Regime and the New Tax Regime. Choosing the right regime can have a significant impact on your tax liability, so it’s important to understand the key differences between the two.

What is the difference between the old and new tax regime?

The tax slabs and rates vary between the old and new tax regimes. The old tax regime allows taxpayers to claim a wide range of deductions and exemptions, such as those under sections 80C, 80D, HRA, and others. In contrast, the new tax regime offers lower income tax rates, but with very limited deductions and exemptions, making it a simplified option for those who do not have many tax-saving investments.

Which is better between the old tax regime and the new tax regime?

There is no fixed answer to this—it depends on your income, savings, and how many tax deductions you can claim. Some people may save more under the old tax regime because it allows many deductions like HRA, 80C, and 80D. Others may benefit from the new tax regime which has lower tax rates but fewer deductions. To know which one is better for you, it’s a good idea to compare both options. You can use the Income and Tax Calculator available on the Income Tax Department’s website to check and see under which regime you will pay less tax.

Is it necessary for the employee to intimate the tax regime to the employer?

Yes, it is important for an employee to inform the employer about which tax regime they want to follow during the financial year. If the employee does not give any intimation, the employer will assume that the employee has chosen the default tax regime, which is the new tax regime, and will deduct TDS (Tax Deducted at Source) accordingly as per Section 115BAC.

However, it’s also important to note that simply informing the employer does not count as the final selection of the tax regime for income tax filing. The employee must officially choose the tax regime while filing the income tax return under Section 139(1), before the due date. So, even if you tell your employer your choice, you must reconfirm it while filing your return.

I am a salaried taxpayer. 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.

Am I eligible for Rs. 50,000 standard deduction in the new tax regime?

Yes, Standard deduction of Rs.50,000 or the amount of salary, whichever is lower, is available for both old and new tax regimes from AY 2024-25 onwards.

In the new tax regime can I claim deductions under chapter-VIA like section 80C, 80D, 80DD, 80G etc. while filing the ITR for AY 2024-25?

In new tax regime, Chapter-VIA deductions cannot be claimed, except deduction u/s 80CCD(2)/80CCH/80JJAA as per the provision of Section 115BAC of the Income Tax Act, 1961. In case, taxpayer wants to claim any deductions (as applicable), then taxpayer needs to choose the old tax regime by selecting “Yes” option in ITR 1 / ITR 2 (or) “Yes, within due date” option in ITR 3 / ITR 4 / ITR 5 in the field provided for “opting out option” under Schedule ‘Personal Information’ or ‘Part- A General’ in the respective ITR.

Sections	Details
Section 80C	Investments in LIC, PPF, Sukanya Samriddhi Account, Mutual Funds, FD, child tuition fee, ULIP, etc
Section 80CCC	Investment in Pension Funds
Section 80CCD (1)	Atal Pension Yojana and National Pension Scheme Contribution
Section 80CCD(1B)	Atal Pension Yojana and National Pension Scheme Contribution (additional deduction)
Section 80CCD(2)	National Pension Scheme Contribution by Employer
Section 80D	Medical Insurance Premium, preventive health checkup and Medical Expenditure
Section 80DD	Medical Treatment of a Dependent with Disability
Section 80DDB	Medical expenditure for treatment of Specified Diseases
Section 80E	Interest paid on Loan taken for Higher Education
Section 80EE	Interest paid on Housing Loan
Section 80EEA	Interest Paid on Housing Loan
Section 80EEB	Interest paid on Electric Vehicle Loan
Section 80G	Donation to specified funds/institutions
Section 80GG	Income Tax Deduction for House Rent Paid
Section 80GGA	Donation to Scientific Research & Rural Development
Section 80GGB	Contribution to Political Parties
Section 80GGC	Individuals on contribution to Political Parties
Section 80RRB	Royalty on Patents
Section 80QQB	Royalty Income of Authors
Section 80TTA	Interest earned on Savings Accounts
Section 80TTB	Interest Income earned on deposits(Savings/ FDs)
Section 80U	Disabled Individuals
Section 80 CCH	Income gained via the Agnipath scheme
80JJAA	Tax deductions on profits and gains from businesses.

Can I claim deduction of Interest on borrowed capital of Rs. 2,00,000/- for self occupied property under Income from House Property in the new tax regime?

In the new tax regime, “Interest on borrowed capital for Self-occupied property” is not allowed as a deduction from Income from House property as per the provision of Section 115BAC of the Act, 1961. In case, the Taxpayer wants to claim deduction of interest on borrowed capital for SOP, then taxpayer must choose ‘Old Tax Regime’ by selecting “Yes” in ITR 1 / ITR 2 or “Yes, within due date” option in ITR 3 / ITR 4 / ITR 5 in the field provided for “opting out option” in the ITR Form.

I am a senior citizen. In the old tax regime there are special advantages in tax rates for senior citizens. Are there any such advantages in new tax regime?

In the old tax regime , the basic exemption limit for senior citizens is Rs. 3,00,000/- and for super senior citizens, it is Rs. 5,00,000/-. In the new tax regime, no income tax is payable upto the total income of Rs. 7 lakh.

Is there any difference in tax rebate under section 87A in old and new tax regime?

In the old tax regime in case of a resident individual, whose total income does not exceed Rs. 5,00,000/- there is rebate of 100 percent of income tax subject to a maximum of Rs. 12,500/. In the new tax regime, w.e.f 01-04-2024, in case of a resident Individual, the rebate will be applicable on total income chargeable to tax under subsection (1A) of section 115BAC as under:

(a) where such total income does not exceed seven hundred thousand rupees, a deduction from the amount of income-tax (as computed before allowing for the deductions under Chapter VIII) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent of such income-tax or an amount of twenty-five thousand rupees, whichever is less;

(b) where such total income exceeds seven hundred thousand rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of seven hundred thousand rupees, a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees.

While filing ITR for FY 2023-24 (AY 2024-25), I want to opt for the old tax regime instead of the default new tax regime, should I file Form 10-IEA before filing his income tax return (ITR)?

Form 10-IEA is a declaration made by the return filers for choosing the ‘Opting Out of New Tax Regime’. An Individual, HUF, AOP (not being co-operative societies), BOI or Artificial Juridical Person with business or professional income must submit Form 10-IEA if they wish to pay income tax as per the old tax regime. On the other hand, taxpayers who do not have income from business or profession can simply tick the “Opting out of new regime” in the ITR form without the need to file Form 10-IEA. Simply put, only those who file ITR-3, ITR-4 or ITR-5 have to submit Form 10-IEA if they have business income (other than coop societies). Individuals and HUFs filing their returns in Forms ITR-1 or 2 are not required to submit Form 10-IEA.

I am filing ITR in new regime for AY 2024-25. Can I switch between old and new tax regime in the next years?

An Individual, HUF, AOP (not being co-operative societies), BOI or Artificial Juridical Person with business or professional income will not be eligible to choose between the two regimes every year. Once they opt out of new tax regime, they have only one chance for switching to new regime. Once they switch back to the new regime, they won’t be able to choose old regime anytime in future. An individual with non business income can switch between the new and old tax regimes every year. Within the same year, again it is emphasized that the choice of old tax regime can be made only before the due date of filing the return u/s 139(1) of I T Act.

I am having business income and have opted in and opted out from the new regime in the previous years. So, will I be in old regime for the AY 2024-25?

The new tax regime is default regime for AY 2024-25. Any actions in any previous years with respect to choice of regimes will not be applicable from AY 2024-25. You are required to submit Form 10-IEA again in case you want to opt for the old regime.

I have business income, I have wrongly filed Form 10-IEA but want to file the return under new tax regime. As there is no option to withdraw Form 10-IEA in that case whether my return can be filed under new tax regime?

Once Form 10IEA is filed for AY 2024-25, then it cannot be revoked / withdrawn in same AY. If you wish to re-enter into new tax regime then you can file Form 10IEA for withdrawal option in the next assessment year. Again it is emphasised that that the choice of old tax regime can be made only before the due date of filing the return u/s 139(1) of IT Act.

I am filing ITR-5. I want to opt out of new tax regime? Whether Form 10-IFA or Form 10- IEA would be applicable to me?

Form 10-IEA is applicable to AOP’s (other than Co-operative society) or BOI or AJP, who are filing return of Income in ITR-5 for AY 2024-25.

Form 10-IFA is applicable to new manufacturing co-operative Societies resident in India filing ITR 5, if they wish to avail New Tax Regime under Section 115BAE for AY 2024-25.

How to Change Tax Regime from New to Old?

Starting from the Assessment Year 2024-25, the Finance Act, 2023 has amended Section 115BAC, making the new tax regime the default for individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), and Artificial Juridical Persons (except cooperative societies). However, eligible taxpayers still have the option to switch to the old tax regime, if they prefer.

The old tax regime refers to the traditional tax structure with higher slab rates but allows taxpayers to claim various exemptions and deductions like HRA, 80C, 80D, etc., which are not available under the new regime.

For taxpayers not having business or professional income (non-business cases), the choice between the new and old tax regime can be made each year by selecting the preferred regime directly while filing the Income Tax Return (ITR) on or before the due date under Section 139(1).

However, for taxpayers with income from business or profession, opting out of the new regime requires a more formal process. They must submit Form 10-IEA on or before the ITR due date. If such taxpayers later wish to switch back to the new tax regime, they must also file Form 10-IEA to withdraw their earlier option.