What are the disadvantages of the new tax regime?
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The primary disadvantage of the new tax regime is the loss of most common tax exemptions and deductions available under the old regime. This can result in higher tax liability for individuals with significant investments in tax-saving instruments or those with specific allowances, such as for home loans.
Why is the new tax regime not good?
The new tax regime has lower tax rates but fewer deductions and exemptions compared to the old tax regime. The old tax regime has more deductions and exemptions but higher tax rates. Calculate income tax liabilities for yourself using an income tax calculator and talk to a professional before choosing a regime.
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).
Do you wish to opt out of the new tax regime?
How to opt out of the new regime. Individuals, HUFs, and AOPs must submit Form 10-IEA to opt out of the new tax regime. Form 10-IEA acts as a formal declaration to switch back to the old regime.
Is it better to opt for a new 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).
Old vs New Tax Regime : Good, Bad, or Ugly?
Can I return from a new tax regime to an old tax regime?
Any individual with an income from a business or profession is not eligible to switch regimes more than once. For instance, once you choose the new tax regime, you can only switch back to the old regime once in your lifetime.
What happens if we select a new tax regime?
The new regime offers lower rates of taxes but permits limited deductions and exemptions.
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.
How to avoid 40% tax?
How to avoid paying higher-rate tax
- 1) Pay more into your pension. ...
- 2) Reduce your pension withdrawals. ...
- 3) Shelter your savings and investments from tax. ...
- 4) Transfer income-producing assets to a spouse. ...
- 5) Donate to charity. ...
- 6) Salary sacrifice schemes. ...
- 7) Venture capital investments.
What will change from 1st April 2025?
Several changes are expected from April 1, 2025, including revisions to income tax rules and UPI framework updates. Major tax changes may include revised tax slabs, a rebate of up to Rs. 60,000, and updated TDS/TCS threshold limits.
What is the new tax regime for senior citizens?
Section 194P of the Income Tax Act, 1961 provides conditions for exempting Senior Citizens from filing income tax returns aged 75 years and above. Conditions for exemption are: Senior Citizen should be of age 75 years or above. Senior Citizen should be 'Resident' in the previous year.
Can we claim tax benefit on a new tax regime?
Standard Deduction: One of the benefits that remains common between both regimes is the standard deduction. The new tax regime allows salaried people and senior citizens earning pensions a standard deduction of ₹75,000. Family Pension: If you have a family pension income, the new regime offers a deduction for it.
What is the difference between the old and new tax regime?
What is the difference between the old and new tax regimes? The old tax regime allows you to claim exemptions and deductions (e.g., HRA, 80C investments) to reduce your taxable income. The new tax regime offers lower tax rates but eliminates most exemptions and deductions.
What is not allowed under the new tax regime?
Amount deductible from gross salary (except standard deduction), which is not allowed under the new regime i Following are not allowed to be deducted in new regime: Exemption with respect to travel concession or assistance as covered in section 10(5); HRA exemption as covered in section 10(13A);
Is home loan interest exempt in new tax regime?
You can avail deduction on the interest paid on your home loan under section 24(b) of the Income Tax Act. For a self-occupied house, the maximum tax deduction of Rs. 2 lakh can be claimed from your gross income annually, provided the construction/ acquisition of the house is completed within 5 years.
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.
Is it better to itemize or take standard deduction?
Taking the Standard Deduction might be easier, but if your total itemized deductions are greater than the Standard Deduction available for your filing status, saving receipts and tallying those expenses can result in a lower tax bill.
Can you pay into a pension to avoid taxes?
Another advantage of personal pension contributions is that they can help reduce your taxable income, and therefore the amount of Income Tax you'll pay. By paying into your pension before tax year-end, you may be able to hold on to certain benefits and allowances, by keeping you in a lower tax band threshold.
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 ...
What is the standard deduction for 2025?
Standard Deduction.
(Additionally, for tax year 2025, the OBBB raises the standard deduction amount to $31,500 for married couples filing jointly. For single taxpayers and married individuals filing separately, the standard deduction for 2025 is $15,750, and for heads of households, the standard deduction is $23,625.)
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.
Are you opting out of the new tax regime?
However, for those who have income from business/profession, it is mandatory to fill Form 10-IEA to opt for the old regime before the ITR filing due date, i.e. 15th September 2025 ( for FY 2024-25). The choice made on the form will determine the tax rules and regulations that apply to the taxpayer.
How to change from new tax regime to old?
It was presented by the Central Board of Direct Taxes. The new tax regime is considered the default tax regime. By filling Form 10-IEA, taxpayers can choose the old tax regime if they wish. They must complete the form before the due date prescribed for filing an income tax return.
Do we need to submit proof for new tax regime?
No, TDS (Tax Deducted at Source) is calculated based on the income declared by the employer in Form 16, along with the applicable tax slabs. The absence of a proof submission under the new regime does not affect TDS calculation. Employees will still have TDS deducted correctly by the employer.