Wondering which tax regime is better in 2024–25? Explore a simple side-by-side comparison with real incomes, FAQs, and a free calculator tool to make the smartest tax-saving choice for salaried individuals, freelancers, and pensioners.
Introduction: Why Choosing the Right Tax Regime Matters
Confused between the new and old tax regimes? You’re not alone — over 65% of Indian taxpayers face this dilemma every financial year, especially during tax filing season. With changing tax rules, deductions, and slab structures, picking the right option is not always straightforward.
The Government of India, through Budget 2023, introduced a significant shift by making the new tax regime the default regime for all taxpayers starting FY 2023–24. While it offers lower tax rates, it also removes the benefit of most deductions and exemptions that the old regime provides. This has left many individuals unsure about which path actually leads to more savings.
The key point to remember is this: There is no “better” regime universally — the better regime is the one that works best for your income, deductions, and lifestyle. That’s where a smart comparison tool like the New vs Old Tax Regime Calculator becomes essential.
By simply entering your income details and claimed deductions, this calculator provides a clear side-by-side view of your tax liability under both regimes. It helps you choose the regime that minimizes your income tax, aligns with your financial planning goals, and ensures compliance with the latest income tax laws.
Here we explore how to use the New vs Old Tax Regime Calculator, compares both regimes for FY 2024–25, highlights use cases, and helps you avoid common mistakes — all written in simple, clear Indian English to support taxpayers, salaried professionals, and self-employed individuals.
What is the New vs Old Tax Regime Calculator?
The New vs Old Tax Regime Calculator is a simple yet powerful online tool that helps Indian taxpayers compare their tax liabilities under both the tax regimes — the traditional old tax regime (with deductions and exemptions) and the newer default tax regime introduced under Budget 2023. It enables you to make an informed, data-backed decision tailored to your financial situation.
This calculator is especially useful for:
- Salaried individuals who wish to compare income tax with or without claiming deductions under Section 80C, 80D, HRA, and more.
- Freelancers and consultants with variable incomes, looking to optimise tax planning without a structured salary setup.
- Pensioners who may or may not have access to standard deductions and exemptions.
- Hindu Undivided Families (HUFs) seeking clarity on how regime-wise tax calculation affects their collective tax liability.
For FY 2024–25, this calculator has become more crucial than ever. Since the new regime is now the default, taxpayers must actively choose the old regime each year if they want to retain their exemptions and deductions. Failing to evaluate both options can lead to higher tax outgo.
Key benefits of using the calculator:
- It provides a clear income tax slab comparison between the two regimes.
- It helps you understand the impact of deductions under Section 80C, 80D, 80G, HRA, and others.
- It gives you personalised tax saving tips (India-specific) based on your data.
- It reduces the complexity of manual calculations and ensures compliance with updated tax norms.
Whether you're filing taxes yourself or consulting a CA, using the New vs Old Tax Regime Calculator should be your first step in effective income tax planning for FY 2024–25.
Old Tax Regime vs New Tax Regime: Key Differences
Understanding the structural differences between the old tax regime and the new tax regime is crucial for any taxpayer in India. While both follow slab-based taxation, the major divergence lies in how they treat deductions and exemptions. The old regime allows several tax-saving options, while the new regime offers lower tax rates with no deductions.
Here’s a side-by-side income tax slab comparison for FY 2024–25 under both regimes:
| Taxable Income | Old Regime (with Deductions) | New Regime (No Deductions) |
|---|---|---|
| ₹2.5L–₹5L | 5% | 5% |
| ₹5L–₹7L | 20% | 10% |
| ₹7L–₹10L | 20% | 15% |
| ₹10L–₹12L | 30% | 20% |
| ₹12L–₹15L | 30% | 25% |
| Above ₹15L | 30% | 30% |
Deductions Under Old Tax Regime
One of the main advantages of the old tax regime is the wide array of deductions and exemptions available. These help in reducing your taxable income, ultimately lowering your tax liability.
Key deductions and exemptions under the old regime include:
- Section 80C: Up to ₹1.5 lakh for investments like PPF, ELSS, NSC, life insurance premiums, etc.
- Section 80D: Deduction on health insurance premiums.
- House Rent Allowance (HRA): For salaried employees living in rented accommodation.
- Leave Travel Allowance (LTA): For travel within India, as per employer’s policy.
- Standard Deduction: ₹50,000 for salaried and pensioners.
- Interest on Home Loan: Under Section 24(b), up to ₹2 lakh annually.
These deductions significantly benefit those who actively invest in tax-saving instruments and have eligible expenses.
Rebate Under New Tax Regime (Section 87A)
Though the new tax regime does not allow most deductions, it offers a rebate under Section 87A for taxpayers with income up to ₹7 lakh. If your total taxable income under the new regime is ₹7 lakh or less, your tax liability becomes zero after applying this rebate. This makes the new regime highly attractive for those with limited deductions and a straightforward income structure.
However, for individuals with substantial deductions under the old regime, the new regime may not always lead to savings. That’s why using the New vs Old Tax Regime Calculator becomes critical for smart and accurate decision-making.
Benefits of Each Regime: Which One Should You Choose?
Choosing between the old and new tax regimes depends largely on your income structure and eligibility for deductions. While the New vs Old Tax Regime Calculator helps simplify the choice, understanding the core benefits of each regime provides additional clarity.
Benefits of the Old Tax Regime
The old regime remains a preferred option for individuals who actively invest in tax-saving instruments and claim various deductions and exemptions. It’s ideal for those looking for income tax savings tips through strategic financial planning.
Best suited for:
- Salaried professionals with HRA, LTA, and other allowances
- Individuals investing in ELSS, PPF, LIC, home loans, etc.
- Pensioners with medical and interest-based deductions
- HUFs and families claiming deductions under multiple sections
Key Benefits:
- Can claim deductions under Section 80C, 80D, 80E, 24(b), etc.
- Standard deduction of ₹50,000 for salaried and pensioners
- Home loan interest and education loan interest exemptions
- Useful for long-term wealth building through investment-linked exemptions
Benefits of the New Tax Regime
The new regime offers simplicity with lower tax rates and no complexity around exemptions. It’s suitable for those who don’t want to invest just to save tax.
Best suited for:
- Salaried individuals with minimal or no investments
- Freelancers or consultants with straightforward income
- Those who prefer cash liquidity over locking funds for deductions
- Young professionals and first-time earners
Key Benefits:
- Flat and lower tax rates across income slabs
- No need to maintain proof or documentation of deductions
- Ideal for those not utilizing major tax-saving provisions
- Rebate under Section 87A makes income up to ₹7 lakh completely tax-free
Real-Life Comparison: New vs Old Tax Regime
Let’s compare two common scenarios using the Indian tax calculator FY 2024–25:
Case 1: Salaried Employee with ₹12L Income + ₹2L Deductions (Old Regime)
- Taxable income after deductions: ₹10L
- Tax as per old regime slabs: ₹1,12,500 (after deductions and rebates)
- Effective tax rate: ~9.4%
Case 2: Salaried Employee with ₹12L Income + No Deductions (New Regime)
- Taxable income: ₹12L
- Tax as per new regime slabs: ₹87,500 (no deductions but lower rates)
- Effective tax rate: ~7.3%
In this case, the new regime is more beneficial, despite no deductions. But if deductions under the old regime had exceeded ₹2.5 lakh, the old regime could offer better savings.
That’s why it’s important to use a trusted New vs Old Tax Regime Calculator to compute accurate, personalized comparisons based on actual figures.
New vs Old Regime Tax Calculator
| Head | Details/ Amt. |
|---|---|
| Gross Income | |
| Exemptions u/s 10 A (HRA etc.) | |
| Professional Tax | |
| Net Income under Salaries | 0.00 |
| Standard Deduction (Auto Applied) | 50000 |
| Deductions u/s 80 C (PF, PPF, Ins, ELSS, NPS: Max Rs.150000) | |
| Deductions u/s 80 CCD (NPS: Max Rs. 50000/-) | |
| Deductions u/s 80 D (Health Insurance: Max Rs. 35000/- ) | |
| Deductions u/s 80 G (Eligible Donations) | |
| Deductions u/s 80 E (Education Loan Interest) | |
| Deductions u/s 80 TTA (FD/Post Office Interest: Max Rs. 40000/-) | |
| Tax Benefit u/s 24 (Home Loan Interest Paid: Max Rs. 200000/-) | |
| Total Deductions/Benefits | 0.00 |
How to Use the New vs Old Tax Regime Calculator (Step-by-Step Guide)
The New vs Old Tax Regime Calculator is designed to help Indian taxpayers instantly compare tax liability under both regimes. Whether you are a salaried professional, freelancer, pensioner, or part of a Hindu Undivided Family (HUF), this tool gives clarity in seconds.
Follow this simple 5-step guide to make an informed choice for FY 2024–25 tax planning.
Step-by-Step Process to Use the Calculator
Step 1: Enter your gross annual income. This includes your total earnings before deductions such as basic salary, HRA, bonuses, allowances, freelance payments, pension, etc.
Step 2: Add all eligible deductions and exemptions (applicable only if you’re considering the old regime). This may include:
- Section 80C (LIC, PPF, ELSS, etc.)
- Section 80D (Medical insurance)
- HRA, LTA, Home Loan Interest
- Standard Deduction of ₹50,000 (auto-applied for salaried and pensioners)
Step 3: Click the “Calculate” button to initiate regime-wise tax calculation.
Step 4: View a side-by-side tax liability comparison between the old and new regimes. The calculator will show:
- Taxable income after deductions (Old Regime)
- Taxable income without deductions (New Regime)
- Total tax payable under each regime
- Applicable rebate under Section 87A if income ≤ ₹7 lakh
Step 5: Check which regime results in lower tax payable and decide accordingly.
Sample Output Format
Below is a sample layout of the results provided by the calculator:
| Particulars | Old Tax Regime | New Tax Regime |
|---|---|---|
| Gross Annual Income | ₹12,00,000 | ₹12,00,000 |
| Deductions Claimed | ₹2,00,000 (80C, 80D etc.) | Not Applicable |
| Taxable Income | ₹10,00,000 | ₹12,00,000 |
| Tax Before Rebate | ₹1,12,500 | ₹87,500 |
| Final Tax Payable | ₹1,12,500 | ₹87,500 |
| Recommended Regime | — | New Regime |
Using this tool ensures you don’t miss out on potential income tax savings tips and helps you follow a structured approach to choosing the best tax regime for salaried individuals and other taxpayers.
Comparison Chart: New vs Old Tax Regime Based on Income Scenarios
To make a well-informed choice between the two regimes, it's important to evaluate not just the tax slabs but also how deductions impact your final tax liability. Below is a comparison chart based on realistic income levels, assuming the individual is claiming ₹2 lakh worth of deductions under the old regime. This table gives a practical view of which tax regime works better based on actual savings.
Regime-wise Tax Calculation with ₹2L Deductions
| Income (₹) | With ₹2L Deductions | Old Regime Tax | New Regime Tax | Best Option |
|---|---|---|---|---|
| ₹6,00,000 | Yes | ₹0 | ₹0 | Either |
| ₹10,00,000 | Yes | ₹72,500 | ₹60,000 | New |
| ₹15,00,000 | Yes | ₹1,17,000 | ₹1,25,000 | Old |
This income tax slab comparison highlights the importance of analyzing your deduction eligibility before choosing a regime. For instance:
- At ₹6 lakh income, Section 87A rebate brings your tax liability to zero in both regimes.
- At ₹10 lakh income, if you don’t have more than ₹1.5–₹2 lakh in deductions, the new tax regime proves more beneficial.
- At ₹15 lakh income with higher deductions like Section 80C, 80D, and HRA, the old regime offers better tax savings.
These insights are essential for both salaried employees and self-employed individuals looking for best tax regime for salaried and planning effective income tax savings tips in India.
Common Mistakes to Avoid While Choosing a Tax Regime
Choosing between the old and new tax regimes can significantly impact your annual tax outgo. However, many taxpayers make avoidable mistakes that lead to higher tax payments or missed benefits. Here are the most common errors people make while selecting a regime — and how you can avoid them using a New vs Old Tax Regime Calculator.
- Assuming the new regime is always better: Many believe the new regime, with lower tax rates, is automatically more beneficial. This is not always true. If you claim significant deductions under Section 80C, 80D, or HRA, the old regime may help you save more. A proper income tax slab comparison is essential before making a decision.
- Forgetting about HRA, 80D, and other deductions: House Rent Allowance (HRA), medical insurance under Section 80D, LTA, education loan interest, and other tax-saving options are not allowed under the new regime. Ignoring these deductions can lead to unnecessary tax burden.
- Not using a tax regime calculator before deciding: Guesswork can cost you money. It’s crucial to input your exact income and deductions into a regime-wise tax calculation tool. This will help you identify where your savings are maximised. Use reliable tools like HR Calcy's Tax Regime Calculator.
- Missing the declaration deadline with your employer:If you’re a salaried employee, you must declare your chosen regime at the beginning of the financial year. Failing to do so may result in default tax deduction under the new regime, even if the old regime would have saved you more.
By understanding and avoiding these mistakes, you can make a smarter, well-informed tax choice aligned with your financial goals. Use an Indian tax calculator FY 2024–25 to take the guesswork out of tax planning.
Best Tools to Compare and Plan Your Taxes
Choosing the most suitable tax regime requires clarity, accurate tax estimates, and planning based on your income and deductions. Thankfully, several reliable tools can help you compare the old vs new tax regime with ease. These platforms offer accurate regime-wise tax calculation, deduction analysis, and help you make tax-efficient decisions for FY 2024–25.
- HR Calcy – Tax Regime Calculator (www.hrcalcy.in) A user-friendly and advanced Indian tax calculator for FY 2024–25, HR Calcy lets you input your income, deductions (like 80C, 80D, HRA), and instantly shows a detailed income tax slab comparison. It is ideal for salaried employees, freelancers, HUFs, and pensioners looking for quick tax-saving tips India-based.
- Income Tax e-Filing Portal (www.incometax.gov.in) The official portal by the Income Tax Department of India offers built-in tools for return filing, tax computation, and assessing tax liability under both regimes. While it requires login, it is a secure and government-verified way to calculate and file taxes.
Using these tools ensures you're not relying on estimates or guesswork. Instead, you make informed financial decisions based on real-time, rule-compliant tax calculations.
Conclusion: Maximize Your Savings With a Smart Choice
Making the right choice between the old and new tax regimes is no longer optional—it’s essential for maximizing your annual tax savings. Each individual’s situation is different, which is why personalized tax planning is the key to financial efficiency. A salaried employee with several deductions may benefit from the old regime, while someone without investments or exemptions might find the new regime more rewarding.
Instead of relying on assumptions or generic advice, use reliable tools for regime-wise tax calculation. A clear income tax slab comparison, paired with insights into your eligible deductions under sections like 80C and 80D, will empower you to choose the best tax regime for your financial goals.
Don’t guess — calculate. Try the New vs Old Tax Regime Calculator now and make an informed decision this tax season based on real data and accurate projections.
FAQ
Is the new tax regime better for ₹10 lakh income?
It depends on your deductions. If you don’t claim major exemptions like HRA, 80C, or 80D, the new regime may offer lower tax. Use an Indian tax calculator for FY 2024–25 to compare both options precisely.
Can I switch tax regime every year?
Yes, salaried individuals can switch every financial year while filing returns. However, those with business or professional income can switch only once, unless they stop having such income.
What deductions are not allowed under new regime?
Under the new regime, popular deductions like Section 80C, 80D, HRA, LTA, standard deduction, and professional tax are not applicable. That’s why a proper income tax slab comparison is important before switching.
Do I need to file any form to change the regime?
If you're salaried, you can inform your employer at the start of the financial year. At the time of return filing, you can confirm or change your choice without needing a separate form. Business taxpayers must file Form 10-IEA to opt in or out.
Does the calculator consider rebate under Section 87A?
Yes, smart tools like HR Calcy’s calculator include Section 87A rebate, which offers up to ₹25,000 relief if your total income is under ₹7 lakh in the new regime.
Is new regime applicable for freelancers and pensioners?
Absolutely. Freelancers, pensioners, and HUFs can also choose between the old and new tax regimes. The right option depends on their income structure and available deductions.
What’s the last date to declare regime preference?
Salaried individuals should declare their choice to their employer at the start of FY 2024–25. For ITR filing, the deadline is 31st July 2025 (unless extended). Missing it may lead to automatic selection of the new default regime.
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