Income Tax Slabs 2024-25: Old Regime vs New Regime Comparison
Overview: Two Tax Regimes
India operates two income tax regimes simultaneously. You choose which one to file under each year (salaried individuals) or once per year (business income).
- Old Regime: Higher slabs, but allows 70+ deductions and exemptions
- New Regime (Default from FY 2023-24): Lower slabs, but most deductions removed
New Tax Regime Slabs — FY 2024-25
The new regime was made the default from FY 2023-24. You must explicitly opt for the old regime.
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Rebate: If your income is up to ₹7 lakh, you pay zero tax under the new regime (Section 87A rebate of ₹25,000).
Standard Deduction: ₹75,000 available under the new regime from FY 2024-25 (Budget 2024 increase from ₹50,000).
Old Tax Regime Slabs — FY 2024-25
| Income Range | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Rebate: If taxable income (after all deductions) is up to ₹5 lakh, tax is zero under Section 87A.
Standard Deduction: ₹50,000 available under old regime for salaried individuals.
Key Deductions Available Under Each Regime
Available ONLY Under Old Regime
| Deduction | Section | Limit |
|---|---|---|
| HRA Exemption | 10(13A) | Based on rent paid |
| LTA (Leave Travel Allowance) | 10(5) | Actual expenses |
| Section 80C (ELSS, PPF, LIC, ULIP, EPF, home loan principal) | 80C | ₹1,50,000 |
| NPS additional deduction | 80CCD(1B) | ₹50,000 |
| Health insurance premium | 80D | ₹25,000 (₹50,000 for senior citizens) |
| Home loan interest | 24(b) | ₹2,00,000 |
| Education loan interest | 80E | Unlimited (8 years) |
| Savings account interest | 80TTA | ₹10,000 |
Available Under Both Regimes
| Benefit | Limit |
|---|---|
| Standard Deduction | ₹75,000 (new) / ₹50,000 (old) |
| EPF employer contribution (exempt) | Up to ₹7.5L/year |
| Gratuity received | Up to ₹20L |
| Leave encashment on retirement | Up to ₹25L |
| NPS employer contribution | Up to 10% of salary |
New Regime vs Old Regime: Which is Better?
The new regime wins when you have few or no deductions. The old regime wins when your deductions are substantial.
Break-even Analysis (for ₹10L annual income)
New regime tax ≈ ₹54,600 (after standard deduction of ₹75K)
To benefit from the old regime, your deductions must exceed the difference. A rough rule:
If your 80C + HRA + home loan interest total > ₹2.5 lakh, old regime likely wins.
Practical Examples
Example 1: Rahul earns ₹12L. Lives in own house, invests ₹1.5L in ELSS.
- Old regime tax: ~₹1,02,000 (with 80C + standard deduction)
- New regime tax: ~₹75,000 (after standard deduction)
- New regime saves ₹27,000
Example 2: Priya earns ₹15L. Pays ₹20K rent/month (metro), invests ₹1.5L ELSS, ₹50K NPS, ₹25K health insurance.
- Old regime tax: ~₹1,05,000 (deductions ≈ ₹4.3L)
- New regime tax: ~₹1,50,000
- Old regime saves ₹45,000
Surcharge and Health & Education Cess
On top of the base tax:
- Health & Education Cess: 4% of total tax (applicable in both regimes)
- Surcharge: Applicable for higher incomes:
- ₹50L–₹1Cr: 10%
- ₹1Cr–₹2Cr: 15%
- ₹2Cr–₹5Cr: 25%
- Above ₹5Cr: 37% (new regime cap at 25% from FY 2023-24)
How to Choose Your Regime
- Estimate your total deductions under the old regime (80C + HRA + 80D + home loan + NPS)
- Calculate tax under both regimes using a tax calculator
- If you have a home loan, HRA, and max out 80C, old regime almost always wins
- If you have no major deductions (fresh graduate, self-employed with few investments), new regime usually wins
Key insight: The new regime is designed for simplicity — fewer paperwork, no need to plan investments just for tax purposes. The old regime rewards those who proactively invest in tax-saving instruments.
Conclusion
For most salaried Indians with an active financial plan (investing in ELSS, paying rent, holding a home loan), the old regime still offers significant savings. However, for those early in their careers or with minimal deductions, the new regime’s lower rates and simplicity are attractive. Calculate both before filing — the choice can save you tens of thousands of rupees annually.