As the financial year FY25-26 kicks off, it’s time to prepare your documents for filing your Income Tax Return (ITR). For most individuals not requiring an audit, the ITR filing deadline is July 31, 2025.

A common question every year is whether to opt for the old tax regime or the new tax regime. The right choice depends on your income, investments, and eligible deductions. In the new tax regime ( FY25-26), you don’t need to pay tax until 12 lakh but since you will be filing tax rebate for the previous year, thus your calculations will be based on New Tax Regime (FY 2024-25).

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What’s the Difference Between the Two Regimes?

New Tax Regime (FY 2024-25)

The new regime offers simplified tax slabs and limited deductions. If your income doesn’t exceed Rs 7 lakh, you can claim a rebate under Section 87A and pay zero tax.

Here are the revised tax slabs:

  • Up to Rs 3 lakh – No tax
  • Rs 3 lakh to Rs 7 lakh – 5%
  • Rs 7 lakh to Rs 10 lakh – 10%
  • Rs 10 lakh to Rs 12 lakh – 15%
  • Rs 12 lakh to Rs 15 lakh – 20%
  • Above Rs 15 lakh – 30%

Also, starting FY 2024-25, the standard deduction under the new regime was raised raised to Rs 75,000.

Old Tax Regime (FY 2024-25)

The old tax regime allows taxpayers to claim deductions and exemptions such as:

The standard deduction under this regime remains at Rs 50,000.

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What Deductions Are Allowed?

  • Old Regime: Offers a wide range of deductions like 80C, 80D, 80G (donations), and more.
  • New Regime: Most deductions are disallowed. Only a few such as 80CCD(2), 80CCH, and 80JJAA can be claimed as per Section 115BAC.

Which Regime Should You Choose?

There’s no universal answer.

  • If you don’t claim many deductions and prefer simpler tax filing, the new regime may be better.
  • But if you actively invest in tax-saving instruments or claim housing-related benefits, the old regime could result in lower taxes.

Experts suggest using an online tax calculator to compare both regimes before filing your return.