{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.indusind.com\/iblogs\/savings-account\/difference-between-new-tax-regime-and-old-tax-regime\/#BlogPosting","mainEntityOfPage":"https:\/\/www.indusind.com\/iblogs\/savings-account\/difference-between-new-tax-regime-and-old-tax-regime\/","headline":"Difference Between New Tax Regime and Old Tax Regime","name":"Difference Between New Tax Regime and Old Tax Regime","description":"The Government of India introduced a new tax regime in the 2020 budget to simplify the tax structure. The current tax system allows taxpayers to choose between the old tax regime and the new one. Both regimes have different approaches to income tax calculation, with varying tax slabs and deductions. However, each tax regime offers...","datePublished":"2025-03-18","dateModified":"2025-03-18","author":{"@type":"Person","@id":"https:\/\/www.indusind.com\/iblogs\/author\/indusind_bank_pfx_team_indperformics-com\/#Person","name":"CONVONIX Antony","url":"https:\/\/www.indusind.com\/iblogs\/author\/indusind_bank_pfx_team_indperformics-com\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/7d15b864167d3868c12ffdda340cc1c9?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/7d15b864167d3868c12ffdda340cc1c9?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"IndusInd","logo":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","width":201,"height":86}},"image":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/Difference-Between-New-Tax-Regime-and-Old-Tax-Regime.jpg","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/Difference-Between-New-Tax-Regime-and-Old-Tax-Regime.jpg","height":400,"width":1060},"url":"https:\/\/www.indusind.com\/iblogs\/savings-account\/difference-between-new-tax-regime-and-old-tax-regime\/","about":["Savings Account"],"wordCount":1610,"articleBody":"The Government of India introduced a new tax regime in the 2020 budget to simplify the tax structure. The current tax system allows taxpayers to choose between the old tax regime and the new one. Both regimes have different approaches to income tax calculation, with varying tax slabs and deductions. However, each tax regime offers specific benefits which the other does not. In this article, we will break down the old vs new tax regime as well as look at other factors to help you choose the right one. What is the Old Tax Regime?The old tax regime refers to the traditional tax system in India. Within this regime, taxpayers can benefit from various deductions and exemptions to reduce their taxable income.These deductions include investments in tax-saving schemes like the Public Provident Fund (PPF), National Pension Scheme (NPS), insurance premiums, and house rent allowances, among others. There is a progressive increase in the old regime tax slabs under this regime, where tax rates increase with income levels.The old tax regime slabsare as follows:Income Tax SlabTax Rate (under 60 years of age)Tax Rate (60-80 years of age)Tax Rate (above 80 years of age)Income up to \u20b92.5 lakhNo taxNo taxNo taxIncome between \u20b92.5 lakh to \u20b93 lakh5%No tax No tax Income between \u20b95 lakh to \u20b95 lakh5%5%No tax Income between \u20b95 lakh to \u20b910 lakh20%20%20%Income above \u20b910 lakh30%30%30%To better understand the old vs new tax regime, let\u2019s also look at the new tax regime and its slabs. What is the New Tax Regime?The new tax regime was introduced in 2020. It lowers tax rates across various income levels. However, it removes the option to claim most exemptions and deductions. The new tax regime is also the default tax regime currently.  The government introduced a few changes in Budget 2023 and Budget 2024 to make this regime more lucrative. After Budget 2024, the new tax regime slabs are as follows:Income Tax Slabs for FY 2023-24Tax Rate Income Tax Slabs for FY 2024-25Tax Rate Income up to \u20b93 lakhsNo tax Income up to \u20b93 lakhsNo tax Income between \u20b93 lakhs to \u20b96 lakh5%Income between \u20b93 lakhs to \u20b97 lakh5%Income between \u20b96 lakhs to \u20b99 lakh10%Income between \u20b97 lakhs to \u20b910 lakh10%Income between \u20b99 lakhs to \u20b912 lakh15%Income between \u20b910 lakhs to \u20b912 lakh15%Income between \u20b912 lakhs to \u20b915 lakh20%Income between \u20b912 lakhs to \u20b915 lakh20%Income above \u20b915 lakh30%Income above \u20b915 lakh20%Difference Between New and Old Tax RegimeUnderstanding the new vs old tax regime involves comparing the tax slabs and the benefits on offer. Here\u2019s a summary of the key differences:ParameterOld Tax RegimeNew Tax RegimeTax SlabsHigher tax ratesLower tax ratesDeductions\/ExemptionsMultiple deductions and exemptions for various investments, expenses, and savings. These include deductions under Sections 80C, 80D, 80E, and house rent allowances.Limited major deductions or exemptions.Complexity Complex due to various deductionsSimplified tax filingTax PlanningRequires structured tax planningConsiderably reduced tax planning neededSavings EncouragementEncourages savings through tax benefitsNo incentives for opting for savings plans or schemes like PPF and NPS.         When comparing the new tax regime vs the old tax regime, remember that both regimes have different benefits based on an individual\u2019s financial habits. What to Consider When Choosing Between New and Old Tax RegimesWhen choosing between the new vs old tax regime, several factors should guide your decision:1. Income LevelAssess your annual income and match it against the tax slabs of both regimes. 2. InvestmentsIf you have significant investments in tax-saving instruments, the old regime may be better.3. Financial GoalsConsider your financial objectives. This can include saving for retirement or creating a long-term investment plan. The old regime encourages disciplined savings through deductions.4. Tax SavingsUse a tax calculator or consult with a financial advisor. This will help you compare the actual tax payable under both regimes before making a decision.Also Read: Importance of Tax Planning in Building Long-Term Wealth and Maximising SavingsConclusionIn conclusion, both the new tax regime and old tax regime offer distinct advantages depending on the taxpayer\u2019s financial profile.Just like choosing the right tax regime optimises your tax planning, the right savings account can work wonders for your daily financial management. If you are looking to optimise your finances, consider opening a Zero Balance Account with IndusInd Bank.\u00a0A smart savings plan today can help you manage taxes while securing your financial future. Enjoy the benefits of competitive interest rates on Savings Accounts without worrying about minimal balance requirements.\u00a0Open a bank account now! Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct\/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.Share This:"}