The new financial year has started from 1 April. From this day, changes made in the new tax system and old tax system have been implemented in the budget. In the general budget presented on February 1, Finance Minister Nirmala Sitharaman had reduced the tax to those with income up to Rs 12 lakh under the new tax system. In the new tax system, the government does not impose any tax on income up to Rs 12 lakh. Apart from this, salary-based people also get the benefit of a standard deduction of Rs 75,000 in the new tax system. In such a situation, people who will opt for the new tax system in FY 2025-26. They will not have to pay any tax on earnings up to Rs 12.75 lakh. In such a situation, the question now arises whether the old tax system is better or a new tax system.
Income tax slab in new tax system
| Income tax slab (in rupee) | Income tax rate (%) |
| 0 – 4,00,000 | 0 |
| 4,00,001 – 8,00,000 | 5 |
| 8,00,001 – 12,00,000 | 10 |
| 12,00,001 – 16,00,000 | 15 |
| 16,00,001 – 20,00,000 | 20 |
| 20,00,001 – 24,00,000 | 25 |
| 24,00,001 and above | 30 |
Standard deduction in new tax system
In the new tax system, the government does not impose any tax on income up to Rs 12 lakh. Apart from this, the salaried people in the new tax system also get the benefit of a standard deduction of Rs 75 thousand. In such a situation, people who will opt for the new tax system in FY 2025-26. They will not have to pay any tax on earnings up to Rs 12.75 lakh. Whose annual salary is Rs. For those with income from 20 to 24 lakh rupees, a new slab has been brought in the new tax system, of which 25 percent tax will have to be paid. Slab in the old tax system
TDS limit increased
- What has changed: The limit of TDS (tax deduction at source) has been increased on some payments.
- TDS discount doubled on rental income : TDS limit was increased to Rs 5 lakh on rental income. Increased from 2.4 lakhs to Rs. It has reached 6 lakhs.
- Rebate on interest income for senior citizens doubled : TDS limit has been increased from Rs 50 thousand to Rs 1 lakh for senior citizens receiving interest income from bank FD.
- Increase in TDS limit on commercial services: The TDS limit on commercial services has now increased from Rs 30 thousand to 50 thousand rupees.
- What will be the effect : This will reduce the burden of TDS on those with low income and improve cash flow.
| Income limit (₹) | Tax rate (%) |
| Up to 2,50,000 | (No tax) |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| More than 10,00,000 | 30% |
The old tax system is now beneficial for whom?
In the budget of 2025, no major changes have been made in the slab or exemption of the old system. In which income of up to Rs 2.5 lakh is tax-free and then slabs of 5%, 20% and 30% will be applicable, 80C (1.5 lakh), 80D (25,000-50,000) and home loan interest (up to 2 lakh) will be available. If you take advantage of HRA, home loan or large investment, the old system can still be beneficial. If you live on rent, pay home loans or bear large medical expenses, you can consider the old tax system. If your income is more than Rs 15 lakh and you avail the deduction, then there may be tax deduction under the old system. The new system may reduce tax slabs, but the total tax may increase due to lack of discount. The investor should compare both on the basis of his income, expenditure and investment and choose the correct option.
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