Is it better to opt for a new tax regime or an old regime?

Gefragt von: Herr Henryk Berndt B.A.
sternezahl: 4.2/5 (48 sternebewertungen)

Choosing between the old and new tax regimes in India depends entirely on an individual's financial situation, specifically their income level and the amount of deductions/exemptions they can claim. There is no single "better" option; a comparative calculation is essential for determining the most beneficial regime for you.

Should I opt for a new tax regime or an old tax regime?

Choosing between the Old and New Tax Regimes depends on your income level, deductions, and exemptions. For salaried individuals with minimal deductions, the New Regime is likely more beneficial due to relaxed tax slabs and a rebate up to ₹7 lakh or ₹12 lakh (based on updated 87A provisions).

What is the disadvantage of the new tax regime?

Disadvantages. The new tax regime does not allow exemptions. This will lead to an increase in the overall taxable amount of taxpayers. For taxpayers with income up to INR 15 lakhs, the new tax regime has lower income taxes but this is at the sacrifice of exemptions and deductions available under the previous tax regime ...

Is there any benefit for the old tax regime?

Old Tax Regime is beneficial to: Those with significant investments in tax-saving instruments. Individuals with high deductions and exemptions, like medical insurance, home loans, and children's education expenses.

Which tax regime is good to choose?

In general, if you have many tax-saving investments and expenses, the old tax regime is likely to be more beneficial for you. However, if you do not have many tax-saving investments or expenses, the new tax regime may be more beneficial for you.

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Can a salaried person change from a new regime to an old regime?

Once they opt out of new tax regime, they have only one chance for switching to new regime. Once they switch back to the new regime, they won't be able to choose old regime anytime in future. An individual with non business income can switch between the new and old tax regimes every year.

What is the optimal tax regime?

Q- Which tax regime is better for 20 lakhs income? If your income is ₹20 lakhs, the best tax regime depends on your eligible deductions: Choose the old regime if your tax-saving deductions exceed ₹3.75 lakhs. Opt for the new regime if your deductions are less than ₹3.75 lakhs.

Which tax regime is better for NRIS?

The old tax regime features high slab rates and allows several deductions and exemptions. It includes the Section 80C, 80D, and home loan interest. The new tax regime offers low tax slabs with limited exemptions/deductions, simplifies compliance, and reduces planning flexibility.

Can I go back to the old tax regime?

Can I switch between the old and new tax regimes every year? Salaried individuals can switch annually by informing their employer. Business income earners can switch only once and must stay in the chosen regime unless they cease business activities.

Can NRI opt for old tax regime?

Residents, as well as non-residents, have the same tax slab rates. Both have the flexibility to choose between the existing tax regime and the new tax regime slabs. Each option offers distinct advantages and understanding them can help you make an informed decision that aligns with your financial goals.

Who should use the new tax regime?

Senior citizens can also opt for the new tax regime. While the old regime offers additional exemptions such as a higher basic exemption limit and deductions for medical insurance under Section 80D, the New Tax Regime provides simplicity and lower tax rates without these benefits.

Do we get a refund in the new tax regime?

New Regime

For FY 2024-25, if an individual's total taxable income is up to Rs.7 lakh, he will be eligible for rebate up to Rs.25,000. However, for FY 2025-26, if an individual's total taxable income is up to Rs.12 lakh, he will be eligible for rebate up to Rs.60,000.

What is not allowed in the new tax regime?

Fewer Deductions: The new tax regime does not allow deductions such as HRA, LTA, Section 80C, , 80D, medical expenses, education loan interest, or investments in certain plans.

What are the drawbacks of the new regime?

A key feature of the new regime is the limited scope for deductions. Taxpayers cannot claim most common deductions available under the old regime, including Section 80C (investments in LIC, PPF, ELSS, etc.), Section 80D (health insurance premiums), Section 80E (education loan interest), and House Rent Allowance (HRA).

What is the new tax regime for NRI in India?

New Tax Regime (Default from AY 2024-25)

₹3,00,001 to ₹7,00,000: 5% ₹7,00,001 to ₹10,00,000: 10% ₹10,00,001 to ₹12,00,000: 15% ₹12,00,001 to ₹15,00,000: 20%

Can I switch regimes every year?

Salaried taxpayers can switch regimes every financial year. Business and professional taxpayers can switch only once after opting for the new regime. After switching back to the old regime, the new one is barred unless business income ceases. Depreciation, losses, and deductions play a decisive role in this choice.

Which is better, old or new tax regime in 2025?

Income up to Rs 12 lakhs can be tax-free under the new regime due to increased rebate from FY 2025-26. The aforesaid rebate is not applicable for income taxable at special rates. eg., capital gains, online gaming income, etc. Under the old regime, income up to Rs 5 lakhs can be effectively tax-free.

Can I change from old regime to new regime while filing ITR?

Taxpayers have the power to change the tax regime while filing ITR. The new tax regime, introduced in the 2020 budget, is a default regime from the financial year 2023- 2024 onwards. However, taxpayers are not bound by this and can opt for the old tax regime as per their preference.

Is 80C allowed in new regime?

Section 80C provides deductions up to Rs.1.5 lakhs on various investments and expenses. These include deductions for life insurance premiums, PPF, home loan principal repayment, ELSS mutual funds, Sukanya Samriddhi Yojana, and many more. Deduction under section 80C is not available under the new regime.

How to avoid 40% tax?

How to avoid paying higher-rate tax

  1. 1) Pay more into your pension. ...
  2. 2) Reduce your pension withdrawals. ...
  3. 3) Shelter your savings and investments from tax. ...
  4. 4) Transfer income-producing assets to a spouse. ...
  5. 5) Donate to charity. ...
  6. 6) Salary sacrifice schemes. ...
  7. 7) Venture capital investments.

Which country has the best tax regime?

The top 10 low-tax countries in 2025

  1. United Arab Emirates (UAE) ...
  2. Bahamas. ...
  3. Switzerland. ...
  4. Cayman Islands. ...
  5. British Virgin Islands (BVI) ...
  6. Vanuatu. ...
  7. Turks and Caicos Islands. ...
  8. Anguilla.

What is the 90% rule for non-residents?

What is the 90% Rule? In a nutshell, the 90% rule is simple: if 90% or more of your worldwide income is from Canadian sources in the tax year, you're eligible for non-refundable tax credits reserved for residents.

What did Albert Einstein say about the income tax?

“The hardest thing in the world to understand is the income tax.” Albert Einstein hit the nail on the head with this oft-repeated quote. The U.S. Tax Code is long, complex, and ever-changing. This is especially true for people with higher incomes, changing life circumstances, and families to consider.

Which taxes are most efficient?

Some economists argue that taxes on consumption are always more efficient than taxes on income, because the latter have a greater disincentive effect.

Which tax regime is better, old or new for home loans?

Which tax regime is better, old, or new for home loans? The old tax regime is generally better for home loans, as it allows deductions for home loan interest and principal repayments, which are not available under the new tax regime. The new regime offers lower tax rates but fewer deductions.