Section 115BAC – New Regime vs Old Regime: A Practical Comparison for 2025
🧾 Tax Slabs Under New vs Old Regime (FY 2024–25)
A. New Regime (Default under Section 115BAC)
| Total Income (₹) | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹6,00,000 | 5% |
| ₹6,00,001 to ₹9,00,000 | 10% |
| ₹9,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
➡️ Rebate under Section 87A: Taxpayers with income up to ₹7,00,000 get full tax rebate (i.e., pay zero tax).
B. Old Regime
| Total Income (₹) | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
➡️ Rebate under Section 87A available only up to ₹5,00,000 income.
🎁 Key Differences – Deductions & Exemptions
| Feature / Deduction | New Regime (115BAC) | Old Regime |
|---|---|---|
| Standard Deduction (₹50,000) | ✅ Allowed (from FY 23-24) | ✅ Allowed |
| Section 80C (₹1.5 lakh) | ❌ Not allowed | ✅ Allowed |
| Section 80D (Medical Insurance) | ❌ Not allowed | ✅ Allowed |
| HRA & LTA | ❌ Not allowed | ✅ Allowed |
| Home Loan Interest (Sec 24b) | ❌ Not allowed | ✅ Allowed |
| NPS (80CCD(1B)) | ❌ Not allowed | ✅ Allowed |
| Education Loan Interest (Sec 80E) | ❌ Not allowed | ✅ Allowed |
| Donations (80G) | ❌ Not allowed | ✅ Allowed |
| EPF & PPF Contributions | ❌ Not allowed | ✅ Allowed |
📌 New regime offers lower slab rates but disallows most deductions.
🧠 Practical Comparison – Who Should Choose What?
✅ Choose New Regime If:
- You are a salaried individual not claiming major deductions.
- Your income is up to ₹7 lakh (zero tax due to rebate).
- You want simple compliance and don’t invest in PPF, insurance, etc.
- Freelancers, consultants with no 80C or HRA benefit.
✅ Choose Old Regime If:
- You have home loan, HRA, or claim multiple deductions (80C, 80D).
- You invest regularly in tax-saving instruments like ELSS, LIC, PF, etc.
- Your deductions exceed ₹3 lakh overall.
📊 Illustration: Tax Comparison for ₹10,00,000 Income
Assumptions:
- 80C = ₹1,50,000
- 80D = ₹25,000
- Standard Deduction = ₹50,000
- HRA Benefit = ₹75,000
A. Old Regime
Taxable Income = ₹10,00,000 – ₹3,00,000 = ₹7,00,000
Tax = ₹62,500 (after rebate and slab benefit)
B. New Regime
Taxable Income = ₹10,00,000 – ₹50,000 = ₹9,50,000
Tax = ₹60,000 (as per slab)
No deductions allowed beyond ₹50,000
➡️ In this case, Old Regime still gives slightly better benefit.
🔄 Switching Between Regimes
- Salaried individuals: Can switch between new and old every year.
- Business/profession income: Can opt in/out only once (after that, once opted out of new regime, can’t re-enter).
📅 Filing ITR in Each Regime
| Regime | Applicable ITR | Declaration Required? |
|---|---|---|
| New (Salaried) | ITR-1/2/3 | No, unless opting out |
| Old (Salaried) | ITR-1/2/3 | Opt via ITR form |
| New (Business) | ITR-3/4 | Form 10-IEA required |
📝 Form 10-IEA must be filed before due date to opt for old regime if you're into business.
✅ Best Practices for Choosing Right Regime
- Use online tax calculators to compare tax liability in both regimes.
- Keep track of deductions you’re eligible for annually.
- Salaried individuals can test both options each year before filing.
- Consult a tax advisor if you have business income or conflicting deductions.
📌 Conclusion
Choosing between New and Old tax regimes under Section 115BAC isn’t about which one is “better” — it’s about which is better for you. Evaluate your income sources, deductions, and financial goals to decide the most tax-efficient option.
🧮 Need Help Selecting the Right Regime?
At Verotus Finlegal Solutions LLP, we guide individuals and businesses to make the best tax decisions—whether under the new or old regime.
📍 Kolhapur, Maharashtra
🌐 www.verotusllp.com
📞 +91-7066336680
