New Delhi: The new financial year (2025-26) has begun, and it's time to not only file your Income Tax Return (ITR) but also to plan your tax-saving strategies for the upcoming year. Many taxpayers are uncertain about which tax regime — the old or the new — would benefit them more. The central government has made the new tax regime the default option from April 1, 2024. According to the government, around 67% of taxpayers have opted for the new regime due to the attractive tax rates after the recent changes. But the real question is: can this actually save more tax? Let’s explore which tax system would be more beneficial for you if your annual income is ₹15 lakh or more.
How You Can Benefit from the Old Tax RegimeStandard Deduction:
First, subtract the ₹50,000 standard deduction from the total income of ₹15 lakh. This reduces your taxable income to ₹14.5 lakh.
Tax Benefits on Children’s Education:
If you have paid for your children’s education, you can claim a deduction of up to ₹1.5 lakh under Section 80C. Your taxable income now becomes ₹13 lakh.
Investments in EPF, PPF, ELSS, and NSC:
Investments in schemes like EPF, PPF, ELSS, or NSC can also provide an additional deduction of up to ₹1.5 lakh under Section 80C.
National Pension Scheme (NPS):
Investing in the National Pension Scheme (NPS) can give you an additional ₹50,000 deduction under Section 80CCD(1B), reducing your taxable income to ₹12.5 lakh.
Home Loan Interest:
If you have a home loan, you can claim a deduction of up to ₹2 lakh on the interest paid under Section 24B, bringing your taxable income to ₹10.5 lakh.
Medical Insurance Premium:
You can also get ₹25,000 deduction for yourself and ₹50,000 for senior parents under Section 80D for medical insurance premiums.
After all these deductions, your taxable income will be approximately ₹10 lakh, on which you will have to pay around ₹1,17,000 in taxes.
The standard deduction of ₹75,000 is available under the new regime, reducing your income to ₹14.25 lakh.
With no other deductions available, you will need to pay about ₹1,30,000 in taxes on this income.
If you make the most of investments and deductions, the old tax regime is likely to be more beneficial for you. However, if you prefer to keep the process simple and avoid investment hassles, the new tax regime could be a better choice.
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