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India.com
03-08-2025
- Business
- India.com
New vs Old Tax Regime: Key Rules And Deductions You Must Know Before Filing ITR 2025
New Delhi: Good news for taxpayers! The ITR filing deadline has been extended to September 15, giving you more time to make smart tax decisions. One key choice is picking between the old and new tax regime. If you're a salaried employee or a pensioner with no business income, you can easily switch between the two each year while filing your return, just by selecting the right option in your ITR form. If you earn income from a business or profession, switching tax regimes comes with stricter rules. You're allowed to go back to the old tax regime only once in your lifetime after that, your choice is locked. To make this switch, you'll need to file Form 10-IEA before the ITR deadline. If you miss it, the new tax regime will automatically apply by default. If you are confused about choosing which regime, you should be aware that House Rent Allowance (HRA), Leave Travel Allowance (LTA), deductions under Sections 80C to 80U, and home loan interest under Section 24(b) are only available under the old tax regime. The new regime has fewer deductions, but individuals with taxable income up to Rs 12 lakh get a full tax rebate under the new regime. Your entire income will be taxed slab-wise if your taxable income exceeds Rs 12 lakh. Not sure which tax regime to choose? Here's what you need to know. If you want to claim benefits like House Rent Allowance (HRA), Leave Travel Allowance (LTA), deductions under Sections 80C to 80U, or home loan interest under Section 24(b), you'll need to stick with the old tax regime. The new regime offers fewer deductions, but if your taxable income is up to Rs 12 lakh, you could get a full tax rebate. However, if your income goes above Rs 12 lakh, the entire amount will be taxed according to the slab rates. The slabs are zero tax for the initial Rs 4 lakh, 5 per cent tax on Rs 4 lakh to Rs 8 lakh, 10 per cent on Rs 8 lakh to Rs 12 lakh, 15 per cent on Rs 12 lakh to Rs 16 lakh, and so forth. Importantly, the new regime allows only limited benefits under Sections 80CCD(2) and 80CCH(2), excluding the broader 80C basket popular among salaried taxpayers. Before choosing a regime, consider your income, pay structure, and tax-saving investments. Salaried individuals with minimal deductions may benefit from the new regime. If you can claim substantial deductions under Sections 80C, 80D, HRA, or house loan interest, the old regime may be more beneficial. Also, note that you have losses from house property, capital gains, or business income; they cannot be carried forward under the new regime. This may affect future tax liabilities, so consider it before deciding. As a general rule of thumb, tax experts say that the old tax regime will only be advantageous to taxpayers who are eligible to claim Rs 2 lakh deduction for home loan interest under Section 24(b) or a large house rent allowance (HRA). Most other deductions are unlikely to justify remaining with the old regime. (With IANS Inputs)
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.
Mint
03-07-2025
- Business
- Mint
I asked ChatGPT 'how to save income tax' for FY 2024–25 — I was shocked by the ₹45,000 I saved
Every March, the same story repeats.I open YouTube and search: 'How to save tax?' Soon, I'm watching five different videos giving five different strategies. One suggests ELSS, another pushes insurance, and yet another is throwing formulas like a coaching class. By the end, I'm more confused than when I started. So this year, I tried something different. I opened an AI assistant and typed a simple prompt: "My CTC is ₹ 15,00,000. Can you help me save tax for FY 2024–25?" The result? A clear, personalised roadmap I could actually use. Nothing unusual — just a typical mid-level salaried setup: Basic salary : ₹ 6,00,000 : 6,00,000 House Rent Allowance (HRA) : ₹ 3,00,000 : 3,00,000 Special allowance : ₹ 3,00,000 : 3,00,000 Performance bonus : ₹ 2,00,000 : 2,00,000 Employer PF contribution: ₹ 72,000 Like many, I assumed this was already tax-efficient. But after digging deeper, I found room for improvement. The tool asked a few key questions: Do you live on rent? → Yes → Yes Rent amount? → ₹ 25,000/month → 25,000/month City? → Bengaluru (classified as a metro) Actual HRA received = ₹ 3,00,000 3,00,000 50% of basic salary (for metro) = ₹ 3,00,000 3,00,000 Rent paid – 10% of basic = ₹ 3,00,000 – ₹ 60,000 = ₹ 2,40,000 HRA exempted = ₹ 2,40,000 Only ₹ 60,000 is taxable. Earlier, I was mistakenly paying tax on the full ₹ 3 lakh. This fix alone made a big difference. The assistant nudged me to revisit basic exemptions and deductions under Sections 80C, 80D, and 80G: Deduction type Amount ( ₹ ) Standard Deduction ₹ 50,000 Employee PF (12% of Basic) ₹ 72,000 Term Insurance Premium ₹ 20,000 Health Insurance Premium (80D) ₹ 25,000 NGO Donations (80G) ₹ 10,000 Tip: You can also include these popular 80C options: PPF (Public Provident Fund) LIC premium Home loan principal repayment Tax-saving ELSS funds Many of us already invest in these but forget to claim them properly. The ₹ 2L annual bonus I receive is fully taxable. The AI suggestion? Restructure it into tax-efficient components. Leave Travel Allowance (LTA) Fuel & driver reimbursement Books or professional development expenses Work-from-home allowance These are all legitimate expense categories. If you already incur these costs, ask HR whether they can be incorporated into your pay structure. Tip: Not all companies allow this — but it's worth the conversation. Here's how my taxable income compared under both regimes: Component Amount ( ₹ ) Gross Salary 15,00,000 (-) HRA Exemption 2,40,000 (-) Standard Deduction 50,000 (-) 80C (PF + Term Insurance) 92,000 (-) 80D (Health Insurance) 25,000 (-) 80G (Donations) 10,000 Net Taxable Income (Old Regime) ₹ 10,83,000 Net Taxable Income (New Regime) ₹ 14,50,000 Regime Tax amount ( ₹ ) Old ₹ 1,37,640 New ₹ 1,82,500 All through legitimate exemptions and smart structuring — no complicated tricks. What made the difference wasn't just the tool — it was asking the right questions: Have I accounted for all eligible exemptions under 80C? Am I using 80D and 80G appropriately? Is my HRA correctly calculated? Can my variable pay be optimized? Many salaried individuals miss out on deductions they're already eligible for, just because they don't revisit their structure every year. Recalculate your HRA — don't pay tax unnecessarily — don't pay tax unnecessarily Use 80C to the max — PF, PPF, ELSS, LIC, home loan — PF, PPF, ELSS, LIC, home loan Don't skip 80D and 80G — health and charity both help — health and charity both help Compare old vs new regimes — one isn't always better — one isn't always better Talk to HR — explore reimbursement options — explore reimbursement options Start early — don't leave it for March — don't leave it for March Use digital tools or advisors — for cross-checking and clarity For salaried individuals with simple income structures, it's possible to plan taxes without waiting till the last moment — or relying entirely on financial influencers. Whether you use an online calculator, AI assistant, or consult a CA — what matters is being proactive and informed. Because saving tax isn't about loopholes — it's about knowing the rules and applying them smartly. Disclaimer: This article is for educational purposes only and should not be considered tax advice. Tax outcomes vary by individual, and it is recommended to consult a qualified tax advisor for personalized guidance.
India Today
26-05-2025
- Business
- India Today
Is LTA exempt under the New Tax Regime? What you should know
Many salaried people get Leave Travel Allowance (LTA) as part of their salary package. But with two tax systems, i.e., old and new, many wonder if LTA exemption still applies if they choose the new tax regime. Let's clear that April 1, 2025, the new tax regime has become more appealing. It offers zero tax on income up to Rs 12 lakh for the financial year 2025-26. Naturally, taxpayers want to know if they can reduce their taxable income by claiming LTA exemption under this new LTA EXEMPTION ALLOWED IN THE NEW TAX REGIME?The simple answer is no. The income tax rules say that LTA exemption is not available under the new tax regime. If you choose the new tax system for FY 2025-26 and receive LTA from your employer, you cannot claim any exemption on it. The LTA will be fully LTA TAXBLE UNDER THE NEW REGIME? Yes. Since the exemption is not available, any LTA you get as part of your salary will be added to your taxable income and taxed accordingly. Even if you submit travel bills for your journeys, it won't reduce your tax in the new CAN PRIVATE SECTOR EMPLOYEES CLAIM LTA EXEMPTION?If you work in the private sector and want to claim LTA exemption, you must opt for the old tax regime for FY 2025-26. The old regime allows this exemption under Section 10(5) of the Income Tax Act, but you need to follow some rules to claim EXEMPTION RULES IN THE OLD REGIMEadvertisementUnder the old tax regime, LTA exemption can be claimed twice within a block of four years, with the current block running from January 1, 2022 to December 31, 2025. If you don't use your LTA exemption during this period, you may carry forward one journey to the next exemption is valid only for travel within India and does not apply to international trips. You can claim travel expenses not only for yourself but also for your spouse, children, and dependent parents or the exemption covers only the actual cost of travel by air, train, or bus and does not include hotel stays and meals. To claim this exemption, you must submit your travel bills and documents to your employer within the deadline they specify.
