Tax Guide
Old vs New Regime: Which is better?
The New Tax Regime offers lower tax rates but does not allow most deductions (like 80C, HRA). The Old Tax Regime has higher rates but allows you to claim deductions to lower your taxable income.
When to choose Old Regime?
You should typically stick to the Old Regime if you have significant investments and expenses that qualify for tax breaks, such as:
- Section 80C: Up to ₹1.5 Lakhs (EPF, PPF, LIC, ELSS).
- Section 80D: Medical Insurance premiums for self and parents.
- HRA: If you live in a rented house and receive HRA.
- Home Loan Interest: Up to ₹2 Lakhs deduction (Section 24b).
What's new in FY 2025-26?
The government has made the New Regime the default option. Standard Deduction has been increased to ₹75,000 for the New Regime. Also, tax slabs under the New Regime have been relaxed, making it beneficial for anyone earning up to ₹7 Lakhs (who pay Zero Tax).