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Old vs New Tax Regime_ Which One Saves You More in 2025

Choosing between the Old and New Tax Regime for FY 2024u201325 depends on your deductions, financial goals, and tax planning needs. This guide breaks down income tax slabs, pros and cons, and a real-world example to help you decide smarter.

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Old vs New Tax Regime_ Which One Saves You More in 2025

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  1. OldvsNewTaxRegime:WhichOne SavesYouMorein2025? Asthefinancialyear2024–25unfoldsandUnionBudget2025bringsminorbut impactfultweaks,taxpayersacrossIndiaareagainfacedwithafamiliarquestion: ShouldIchoosetheOldTaxRegimeortheNeTaxRegimehilefilingmytaxes?While bothregimesaimtoreduceyourtaxburden,eachdoessoinverydifferentways. ThisguidebyRitsCapitalbreaksdownthelatestIncomeTaxSlabs,available deductions,andcomparisonpointstohelpyoudecidewhichoptionisbetterforyour ITRfilingin2025. UnderstandingtheTwoTaxRegimes TheOldTaxRegimeisthetraditionaltaxsystem,offeringawiderangeofdeductions andexemptionstoreduceyourtaxableincome.Youcanclaimdeductionsunder sectionslike80C(investments),80D(healthinsurance),HRA(HouseRentAllowance), andmore. TheNewTaxRegime,introducedinFY 2020-21,simplifiesthestructurebyoffering lowerIncomeTaxSlabsbutremovesmostdeductionsandexemptions.Thegoalisto simplifythetaxfilingprocessandbenefitthosewhodonotinvestheavilyintax-saving instruments. IncomeTaxSlabsforFY2024-25(AY2025-26) NewTaxRegime(DefaultasperUnionBudget2025)

  2. StandardDeduction:₹50,000(introducedfromFY2023–24) RebateunderSection87A:Availableforincomeupto₹7,00,000(zerotax payable) OldTaxRegime StandardDeduction:Notapplicableearlier;mayvarybasedonemployment MultipledeductionsunderSections80C, 80D, HRA, etc. RebateunderSection87A:Applicableforincomeupto₹5,00,000 KeyDifferencesBetweenOldandNewTax Regime

  3. Example:ComparingOldvsNewTaxRegimein2025 Let’scompareOldvsNewTaxRegimewithareal-world exampletounderstandthe potential savings. Scenario: GrossSalary:₹12,00,000perannum DeductionsunderOldRegime: Section80C(EPF, PPF,ELSS,etc.):₹1,50,000

  4. Section80D(HealthInsurance):₹25,000 HRA exemption: ₹1,00,000 StandardDeduction: ₹50,000 1.OldTaxRegimeCalculation: TaxableIncome=₹12,00,000–(₹1,50,000+₹25,000+₹1,00,000+₹50,000) NetTaxable=₹8,75,000 Tax(asperslab)=₹87,500(approx.,excludingcess) 2.NewTaxRegimeCalculation: TaxableIncome=₹12,00,000–₹50,000(StandardDeduction)=₹11,50,000 Tax(asperslab): 0–3L:Nil 3–6L:₹15,000 6–9L:₹30,000 9–11.5L:₹37,500 Total=₹82,500(approx.,excludingcess) Conclusion: Despitelowerdeductions,theNewTaxRegimecomescloseintaxliabilityinthiscase duetolowerrates.However,ifmoredeductions(likehomeloaninterest)wereclaimed, theOldRegimemightoffergreatersavings. ProsandConsofEachTaxRegime OldTaxRegime Pros: Hightaxsavingsforinvestorsandpolicyholders Bestforsalaried individualswithrent,loanEMIs,and insurancepremiums

  5. Suitableforfamilieswithmultipleexemptions(educationloan,children’stuition, etc.) Cons: Complexdocumentationfortaxfiling Requiresinvestmentdisciplinetoclaimdeductions NewTaxRegime Pros: Hassle-freetax filing Noneedtomaintainproofsofinvestments Encouragesflexibilityinfinancialplanning Cons: Noincentivestosaveorinvest LossofkeybenefitslikeHRAandhomeloaninterest HowtoChoosetheRightTaxRegimein2025 Beforeyoumakeachoice,followthesethreesimplesteps: CalculateYourTotalIncome Includeallsources:salary,businessincome,capitalgains,andrentalincome. Assess Your Deductions Listyourinvestments,insurancepremiums,homeloaninterest,educationexpenses, andmedicalinsurance. UseaTaxCalculator Therearemanyonlinetools(includingoneontheRitsCapitalwebsite)thathelp compareOldvsNewTaxRegimeside-by-side.

  6. Note:Youmustdeclareyourchoicewhilefilingyourincometaxreturn.Salaried employeescaninformtheiremployerinAprilbutareallowedtochangetheirchoice duringITRfiling. FinalVerdict:WhichOneSavesYouMore? There’snoone-size-fits-allanswer.Therightchoicedependsonyourincomelevel, spendinghabits,andabilitytoclaimdeductions. ChoosetheOldTaxRegimeifyou: HavehomeloanEMI ClaimHRA Investin80Cschemes Paylife/health insurancepremiums OptfortheNewTaxRegimeifyou: Don’tclaimmajordeductions Prefersimplicityintaxfiling Haveminimalinvestmentobligations LetRitsCapitalHelpYouDecide AtRitsCapital,wespecializeintaxplanning,investmentstrategies,andpersonal finance.Ifyou’reunsurewhethertheOldorNewTaxRegimeisrightforyouin2025, our expertscanprovideadetailedcomparisontailoredtoyourfinancialsituation. Bookaconsultationtodayandtaketheguessworkoutofyourtaxes! ReadMore

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