Old Tax Regime vs Section 115BAC – FY 2024-25 (Finance Act 2024 Updated)

Introduction

Income tax calculation for salaried individuals in India has become more flexible after introduction of the New Concessional Tax Regime u/s 115BAC of the Income Tax Act, 1961. From FY 2024-25, the new regime is the default regime as per Finance Act 2024. However, taxpayers still have the option to choose between the Old Tax Regime and New Tax Regime each year.

Choosing the right regime can help save significant tax. Let us compare both systems in detail, with all the latest slabs, deduction rules, and updated examples.

Old Tax Regime – Overview

Under the Old Regime, taxpayers can claim various deductions and exemptions, reducing their taxable income.

Major Sections (Old Regime):

• Section 80C – LIC, PPF, ELSS, PF, tuition fees, etc. (₹1,50,000)
• Section 80D – medical insurance premium
• Section 80CCD(1B) – NPS additional deduction (₹50,000)
• Section 24(b) – Home loan interest (₹2 lakh)
• Section 10(13A) – HRA exemption
• Standard deduction u/s 16(ia): ₹50,000

Old Regime Tax Slabs (FY 2024-25):

New Tax Regime u/s 115BAC – FY 2024-25 (Corrected Slabs)

Under the new regime, you get lower slab rates but most deductions are not allowed.

New Regime Tax Slabs (FY 2024-25):

Important FY 2024-25 Notes:

• Standard deduction of ₹50,000 now allowed in new regime.
• Up to ₹7 lakh income: zero tax due to rebate u/s 87A.
• New regime is default for AY 2025-26. To use old regime, file Form 10-IEA.

Deductions Allowed vs Not Allowed (FY 2024-25)

Example 1: Income ₹10,00,000

Case A – Old Regime

Deductions: 80C ₹1.5L + 80D ₹25k + Standard Deduction ₹50k

Taxable Income: ₹10L – ₹2.25L = ₹7.75L

Tax: ₹67,500 + cess ≈ ₹70,200

Case B – New Regime

Taxable Income: ₹10L – SD 50k = ₹9.50L

Tax (per slab): ₹52,500 + cess ≈ ₹54,600

New Regime is beneficial by ~₹15,600

Example 2: Income ₹15,00,000

Case A – Old Regime

Deductions (80C+80D+Home Loan+SD) = ₹4.25L

Taxable: ₹15L – ₹4.25L = ₹10.75L

Tax: ₹1,40,400 incl. cess

Case B – New Regime

Taxable: ₹15L – SD 50k = ₹14.50L

Tax: ₹1,45,600 incl. cess

Old Regime is beneficial by approx ₹5,200

Summary Comparison (for quick view)

Pros & Cons Summary

Old Regime – Pros:

More deductions

Good for families with home loans & savings

Promote tax planning

Old Regime – Cons:

Complicated paperwork

High slab rates before deduction

New Regime – Pros:

Simple & clean slabs

Best for those with low deductions

No need for investment proofs

New Regime – Cons:

No 80C/80D/HRA benefits

Less motivation to save

hen to Choose Which Regime?

Final Conclusion

For FY 2024-25, Section 115BAC (new regime) has become the default taxation system. However, it is not beneficial for everyone. If you are claiming deductions under Section 80C, 80D, Section 24 and HRA, the Old Regime might still save more tax.

For taxpayers with no investments and taxable income below ₹7 lakh, the New Regime is clearly better due to 0 tax benefit. Always compare both regimes using exact numbers before filing your return.

FAQs (Latest FY 2024)

Q1. Can we switch every year?

Yes, salaried individuals can choose every year at ITR filing.

Q2. What form to use to opt old regime?

Form 10-IEA must be filed before ITR if you want old regime.

Q3. Is standard deduction available in new regime?.

Yes, ₹50,000 standard deduction is available in both regimes (from FY 2023-24 onward).