Old Tax Regime vs New Tax Regime with Revised Slabs: What to Choose in 2025-26?

Old Tax Regime vs New Tax Regime with Revised Slabs 

Old Tax Regime vs New Tax Regime with Revised Slabs Starting April 1, 2025, the new income tax regime will undergo significant changes, bringing with it revamped tax slabs and an attractive benefit — zero tax liability for individuals earning up to ₹12 lakh per annum. Old Tax Regime vs New Tax Regime with Revised Slabs While this sounds promising, it raises an important question: should you switch to the new regime or stick with the old one?

Old Tax Regime vs New Tax Regime with Revised Slabs The answer lies in how you structure your income and how many tax-saving deductions you currently claim. Old Tax Regime vs New Tax Regime with Revised Slabs This blog breaks down both regimes in detail to help you make an informed decision for the Financial Year 2025-26 (Assessment Year 2026-27).

🔄 What Has Changed in the New Tax Regime (From April 1, 2025)?

Old Tax Regime vs New Tax Regime with Revised Slabs In the Union Budget 2025, the government introduced revised tax slabs under the new regime. A major highlight is that individuals earning up to ₹12 lakh per annum will not have to pay any income tax, provided they opt for the new regime.

Another important change: tax rates for incomes up to ₹24 lakh have been significantly reduced, making the new regime even more appealing for middle-income earners and salaried individuals.

🧾 What Is the Old Tax Regime?

The old tax regime continues to be available for taxpayers who prefer to claim various deductions and exemptions. Old Tax Regime vs New Tax Regime with Revised Slabs Though it has higher tax rates, it allows you to reduce taxable income by making investments, paying insurance premiums, availing HRA, and more.

✅ Key Deductions Available Under the Old Tax Regime:

This regime is ideal for those who have multiple avenues for tax-saving investments and documentary proof to claim them.

https://www.incometax.gov.in/iec/foportal/

🆕 What Is the New Tax Regime (FY 2025-26)?

The new regime is a simplified version of tax computation where most deductions and exemptions are not available, but the slab rates are lower, and the compliance burden is minimal.

✅ Key Benefits of the New Tax Regime (with Revised Slabs):

• Old Tax Regime vs New Tax Regime with Revised Slabs No tax on income up to ₹12 lakh.
• Old Tax Regime vs New Tax Regime with Revised Slabs Lower tax rates for income up to ₹24 lakh.
• Standard deduction of ₹75,000 allowed for salaried individuals.
• Deduction under Section 80CCD(2): Employer’s contribution to NPS up to 14% of basic salary (higher than the 10% allowed under old regime).
• No need to submit or preserve documents or proofs for claiming deductions.
• Telephone and conveyance reimbursements remain exempt, just like in the old regime.

📊 Old vs New Tax Regime: Comparative Table for FY 2025-26

💡 Which Tax Regime Should You Choose in 2025-26?

Choosing between the two regimes depends on your income structure, investment habits, and personal preferences.

✅ Opt for the Old Tax Regime if:

• You actively invest in EPF, PPF, ELSS, or NPS.
• You claim HRA, home loan interest, health insurance, and other deductions. Old Tax Regime vs New Tax Regime with Revised Slabs
• You’re comfortable managing and submitting proofs and documents during filing.

✅ Opt for the New Tax Regime if:

• You don’t claim many deductions.
• Your income is up to ₹12 lakh — enjoy zero tax liability.
• You prefer a simple, documentation-free tax filing process.
• Your employer offers NPS contributions up to 14% of basic salary — you benefit more here than in the old regime.

🧮 Real-World Example

Let’s say you earn ₹18 lakh per annum.

• Under the old regime, with proper deductions (80C, 80D, HRA, NPS), your taxable income might come down to ₹11 lakh, and your tax outgo could be around ₹1.3 lakh after rebates.
• Under the new regime, with no deductions but a flat zero tax up to ₹12 lakh, and lower slab rates beyond that, your tax outgo may be significantly less than in the old regime — and without the hassle of documentation.

That’s why many taxpayers in this income range are considering switching to the new regime from FY 2025-26.

🧾 Final Thoughts

The new tax regime with revised slabs aims to simplify taxation and ease the burden on the middle class. Old Tax Regime vs New Tax Regime with Revised Slabs However, for those with significant tax-saving investments and deductions, the old regime may still prove beneficial.

👉 The best approach? Use a tax calculator to estimate your tax liability under both regimes before making a decision.

🔍 FAQs

Q1. Can I switch regimes every year?
Yes, if you are a salaried individual, you can choose between the two regimes every year while filing your income tax return.

Q2. Will the revised slabs under the new regime apply to all taxpayers?
Yes, the revised slabs will be applicable to all who opt for the new regime starting from FY 2025-26.

Q3. Are deductions for home loan interest allowed in the new regime?
No, home loan interest deductions (Section 24) are only available in the old tax regime.

If you found this blog helpful, share it with your friends or colleagues who may benefit from this clarity. Need help filing your taxes under the best regime for your income? Contact us today!

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