Should you opt for the old tax regime, or the new tax regime in the new financial year starting April 2025?

With the standard deduction under old tax regime staying the same at Rs 50,000 and 3 tax slabs, there were no changes introduced in the old tax regime. Here are the existing tax slabs under the old tax regime (for those aged under 60 years)

Up to Rs 2,50,000- Nil
Rs 2,50,001 to Rs 5,00,000- 5%
Rs 5,00,001 to Rs 10,00,000-20%
Over Rs 10,00,000-30%

If you annual income is around Rs 20,00,000 (Rs 20,75,000 for salaried individuals), the new tax regime will be beneficial over the old tax regime. Not considering HRA (House Rent Allowance) benefit, which is only available in the old tax regime, a taxpayer's liability on income of Rs 20 lakh will be Rs 2,40,000 under the old tax system. This is post investing Rs 5.25 lakh in savings schemes which can be used for tax deductions. In the new tax regime, where no deductions are allowed, the taxpayer’s liability will come to Rs 2 lakh.

If your annual income is Rs 25,75,00, your tax payable under the old tax regime will be Rs 4,75,800, after you have paid/invested the following:

Investments of up to Rs 1,50,000 under Section 80C
Medical insurance premium of Rs 25,000
Deduction on home loan interest of Rs 2 lakh


Before budget 2025, the tax payable under the new tax regime: Rs 4,75,600
Tax payable under new tax regime (Post April 1, 2025): Rs 3,43,200

This means you will end up saving Rs 1,14,000 or pay 25% less tax under the proposed new tax regime.

If your annual income is Rs 55,00,000, your tax liability under the old tax regime would come to Rs 15,44,000 after you’ve paid/invested the following amounts:

Investments of up to Rs 1,50,000 under Section 80C
Medical insurance premium of Rs 25,000
Deduction on home loan interest of Rs 2 lakh

Your tax payable under the new tax regime (before Budget 2025) would come to Rs 15,32,960. On the other hand, your tax payable under the new, proposed tax regime would be Rs 14,07,120. This means if you opt for the new, proposed tax regime, you will end up paying Rs 1,25,840 less, or 8% less in taxes.

Your tax payable under the old tax regime would come to Rs 95,55,000, provided you have invested/paid the following:

Investments of up to Rs 1,50,000 under Section 80C
Medical insurance premium of Rs 25,000
Deduction on home loan interest of Rs 2 lakh

Under the new tax regime i.e., before Budget 2025, your tax liability would come down to Rs 95,42,000


However, under the new, proposed tax regime, your tax payable would come to Rs 93,99,000. This means you will end up paying Rs 1,43,000 less, or 1.5% less tax in the new, proposed tax regime.