Old Tax Regime VS New Tax Regime – Some people are still confused about the old or new tax regime. Many people are not able to understand which of these two options is best for them. Let us try to explain to you.
Old Tax Regime VS New Tax Regime: The new financial year FY26 has started. With this, now the employed people have started worrying about filing income tax returns for the last financial year. Some people are still confused about the old or new tax regime. Many people are not able to understand which of these two options is best for them. Let us try to explain to you.
Old or new tax regime, which is better?
Both tax structures have their own advantages and disadvantages. Which regime you choose depends on your profile and the investments you have made. For example, if you fall in the high tax bracket and are entitled to less tax deduction, then the new tax regime is more suitable. On the contrary, when you have invested in several tax saving facilities like PPF, ELSS and KVP and are entitled to HRA, then the old tax system may be more suitable.
Will you get the benefit of tax exemption in the budget announcement?
Taxpayers will not get the benefit of the changes announced on 1 February 2025 this time. Actually, these changes will be effective from 1 April 2025 which is for the financial year 2025-26. You will file its income tax return in 2026. This time, the provisions announced in Budget 2024 will be applicable. Let us tell you that while presenting the budget on February 1, Finance Minister Nirmala Sitharaman announced no income tax on income up to Rs 12 lakh in the new tax regime. Apart from this, changes were also made in the slab and standard deduction.
How much is the standard deduction?
Under the old tax system, the standard deduction is Rs 50000, while in the new tax system it is Rs 75,000.
How to select the new tax regime
You do not need to choose the new system. This is a default system. If you find the old tax system suitable then you have to select it.
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