Income Tax Slabs FY 2024-25 & AY 2025-26 ( New & Old Regime Tax Rates)

Understanding the income tax slabs for the financial year 2024-25 (assessment year 2025-26) is crucial for you before ITR Filing. Both the old and new tax regimes offer different benefits. Thus, taxpayers can choose the tax regime as per their own financial needs and understanding. Let’s understand the latest income tax slabs for FY 2024-25 and AY 2025-26.

Old Regime Tax Rates for FY 2024-25 (AY 2025-26)

In the old tax regime, taxpayers can avail multiple exemptions and deductions. These exemptions and deductions can significantly reduce their taxable income.

The tax slabs under the old tax regime are as follows:

Note: Individuals with a net taxable income up to ₹5 lakh are eligible for a rebate under Section 87A, resulting in zero tax liability.

New Regime Tax Rates for FY 2024-25 (AY 2025-26)

The new tax regime is straightforward with lower tax rates and no exemptions or deductions.

The new tax regime is beneficial for those who do not have substantial investments or qualified expenses.

Comparison of Old vs. New Tax Regime

Advantages of Old Tax Regime

• If you’ve invested heavily in tax-saving instruments like PPF, NSC, and life insurance, the old regime is beneficial because you can claim deductions on these.
• You can deduct expenses such as your children’s tuition fees, home loan interest, and medical insurance premiums, significantly reducing your taxable income.
• You can also claim various exemptions, including House Rent Allowance (HRA) and Leave Travel Allowance (LTA), to lower your tax liability further.

Disadvantages of Old Tax Regime

• It is difficult to keep track of all the exemptions and deductions.
• You need to do tax planning and keep accurate records throughout the year, which can be a hassle.

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Advantages of New Tax Regime

• The new regime simplifies things with lower tax rates and no need to track multiple exemptions and deductions.
• It’s ideal for those with minimal investments in tax-saving instruments and who prefer an easy, hassle-free ITR Filing process.

Disadvantages of New Tax Regime

• You miss out on the benefits of various deductions and exemptions available under the old regime, which can be a disadvantage if you have significant eligible expenses.

How to choose between New & Old Tax Regime? 

Choosing between the New and Old Tax Regimes depends on your financial situation and preferences. The Old Regime offers various deductions and exemptions, which can be beneficial if you have significant investments and expenses. The New Regime, with lower tax rates and no deductions, might be simpler and advantageous for those with fewer investments. To make the best choice, consult a Chartered Accountant (CA). They can analyze your financial details and guide you towards the most tax-efficient option tailored to your needs.

Also Read:

Income Tax Slabs FY 2023-24 & AY 2024-25 (New & Old Regime Tax Rates)