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News18
02-08-2025
- Business
- News18
Old vs New Tax Regime: Key Deductions For Taxpayers Earning Rs 12 LPA May End From FY26, Here's Why
Last Updated: Salaried individuals earning up to Rs 12 lakh may soon no longer need old-regime deductions, as the new tax system offers near-zero tax. If you are a salaried employee earning up to Rs 12 lakh annually, this year might be the last time you benefit from deductions under the old tax regime. Starting from the next financial year (FY 2025–26 / AY 2026–27), the new tax regime will make income up to Rs 12 lakh almost tax-free, reducing the need for old-regime tax planning. Currently, you still have the option to choose between the old and new tax regimes when filing your Income Tax Return (ITR) for FY 2024–25 (AY 2025–26). The deadline to file is September 15 this year. But with new changes coming in, many salaried individuals may shift permanently to the new regime next year. The old tax regime allows you to claim several deductions and exemptions: – House Rent Allowance (HRA) – Leave Travel Allowance (LTA) – Interest on home loan (Section 24b) What the New Regime Offers The new tax regime has fewer deductions but higher income thresholds for rebates. Here is how it compares: – Rebate under Section 87A: Rs 5 lakh (old) vs Rs 7 lakh (new) – Standard deduction: Rs 50,000 (old) vs Rs 75,000 (new) – Maximum rebate: Rs 12,500 (old) vs Rs 25,000 (new) While some deductions like the standard deduction (Section 16) apply to both regimes, popular ones like HRA, LTA, and home loan interest are only available under the old regime. Under the new structure, only limited benefits such as employer contribution to NPS (Section 80CCD(2)) and Agniveer Corpus Fund (80CCH(2)) are allowed. Most other tax-saving instruments under Section 80C are excluded. What This Means for You The government is encouraging taxpayers to switch to the simpler new regime, which is more straightforward but doesn't reward investment-based tax savings. For those earning up to Rs 12 lakh, the new system will result in little to no tax, even without claiming deductions. So, if you are filing your return this year using the old regime, make sure you make the most of it, as it could be the last year these tax breaks are available to you. view comments First Published: News business Old vs New Tax Regime: Key Deductions For Taxpayers Earning Rs 12 LPA May End From FY26, Here's Why Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
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Business Standard
02-05-2025
- Business
- Business Standard
Old vs new tax regime: which one saves you more money in ITR filing
India gives people two systems, called regimes, to pay their income tax. The old regime allows you to reduce your taxable income by claiming various deductions and exemptions, like those for insurance premiums, home loan interest, house rent or travel allowance. The new regime, introduced under Section 115BAC, offers lower tax rates but no other benefits besides a few deductions. We explain the key differences between the two regimes and deductions available. Deductions in old tax regime These popular deductions and exemptions are exclusive to the old regime: Section 80DDB (Medical??'treatment expenses for specified diseases) – as per prescribed limits Section 80GG (Rent paid if you don't receive HRA) – excess of 10 per cent of total income, capped at Rs 5,000/month or 25 per cent of income House rent allowance (HRA) under Section 10(13A) – as per actual rent paid and salary structure Leave travel allowance (LTA) – travel costs for self and family, within India, twice in a block period Deductions permitted under the new tax regime These are the only deductions and exemptions you can claim in the new regime: Standard deduction (Section 16 (ia) – Rs 75,000 for FY 2024??'25 Employer's NPS Contribution (Section 80 CCD (2) – up to 14 per cent of salary Agniveer Corpus Fund (Section 80CCH) – amount deposited in the fund Voluntary retirement (Section 10 (10C), gratuity (Section 10(10) and leave encashment (Section 10(10AA) – as per statutory limits Transport allowance (for differently abled persons), conveyance and daily allowances, official perquisites (Section 10(14)) – actuals incurred for duty purposes Interest on Let??'out Property (Section 24(b)) – as applicable to rental income Which regime should you choose?
