New rules of income tax have been implemented since 1 April 2025 for taxpayers across the country. If you do a job or are from salary, then these changes have brought a lot of relief for you. On 1 February 2025, Union Finance Minister Nirmala Sitharaman, while presenting the general budget, announced several major reforms in the new tax regimen. The main objective of these reforms was to make the tax system more simplified and to give more discounts to taxpayers.
Now no tax will have to be paid on income up to 12.75 lakhs
The biggest announcement in Budget 2025 was that income up to Rs 12 lakh annually would be exempted from tax. Even if the salary of a employee is Rs 12.75 lakhs annually, he will not have to pay tax because he will get a standard deduction of ₹ 75,000, which reduces his taxable income.
Along with this, the basic exhalation limit has also been increased to ₹ 4 lakh, which was earlier ₹ 3 lakh. That is, now the earnings of ₹ 4 lakh will be considered completely tax free.
New tax regimen: less tax, more saving
According to Audit and Consultancy firm Deloitte India, taxpayers will get great benefit in new tax slabs:
- The income with an income of Rs 12 lakh will now benefit tax of up to ₹ 83,200.
- There will be a tax saving of about ₹ 52,000 on income of Rs 16 lakh.
- A person with an income of Rs 1 crore can be saved by more than ₹ 1.25 lakh.
All this shows that the new tax reiztive has now become more attractive than ever. Especially for taxpayers who do not make too much investment or deduction claim.
Old Tax Rejeem: beneficial only when there is heavy deduction
However, for the taxpayers who have home loans, HRA claims, or other tax deductions, the old tax rest can still be beneficial. For example, if your annual income is Rs 24 lakh, then Old Regim will prove beneficial only when you are able to claim deduction of at least 8 lakh rupees.
Section 80C: trusted option of investment and tax savings
Under section 80C, you can claim tax deduction of up to ₹ 1.5 lakh by applying money in various investment options. This includes ELSS Funds, PPF, LIC premium, tax saving FD, EPF, Sukanya Samriddhi Yojana, etc. Although this deduction will not be available in the new regimen, it is still effective in the old regimen.
Section 80D: Decision on Health Insurance
Section 80D promotes health insurance. According to this:
- Taxpayers under the age of 60 will get deduction of up to ₹ 25,000.
- This limit for above 60 years is ₹ 50,000.
- If you take a health policy for your elderly parents, you can claim an additional ₹ 50,000 deduction.
In this way, a taxpayer can get deduction of up to ₹ 1 lakh in total through health insurance.
Section 24B: Benefits of interest on home loan
If you bought a house and take a home loan, section 24B is very beneficial for you. Under this, deduction of up to ₹ 2 lakh is given on home loan interest. This deduction is valid only in the old tax regimen.
New Tax Regim Vs Old Tax Regim: Which to choose?
| Income (annual) | Tax in new tax regimen | Tax (including deduction) in the old regimen | Better option |
|---|---|---|---|
| ₹ 12 lakhs | ₹ 0 (after Standard deduction) | ₹ 40,000 – ₹ 60,000 (Dependent on deduction) | New Regim |
| ₹ 16 Lakh | ₹ 1.5 lakh (approx) | ₹ 2 lakh+ (dependent on deduction) | New Regim |
| ₹ 24 Lakh | ₹ 3.5 lakh (approx) | ₹ 2.8 lakh (on 8 lakh deductions) | Depends |
| ₹ 1 crore | ₹ 28.5 Lakh (New) | ₹ 29.75 Lakh (Old) | New Regim |
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