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Feb 03, 2025
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New vs old tax regime: Which income tax regime to choose, what should save your money? Read this to clear all your income tax confusions
The new income tax slabs under the new tax regime proposed in Budget 2025 - with a tax rebate of Rs 60,000 on income up to Rs 12 lakh (and Rs 12.75 lakh for salaried people) under Section 87A - leaves the old tax regime, with three slabs of 5%, 20%, and 30%, with little appeal. This is after the old tax regime offers all the deductions against investments in the tax savings scheme from gross taxable income.
The finance ministry has long favoured delinking investment and savings schemes from income tax liability so taxpayers can make an independent and informed choice solely to maximise their benefits, according to a report published in The Times of India.
The new tax regime is better than the old tax regime for income up to Rs 12 lakh (Rs 12.75 lakh for salaried people), even if one avails of the maximum possible deductions and exemptions of Rs 5,75,000 and 30% of salary as house rent allowance (see table below).
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