Many of the rewards have been put in place by the government of the NDA to encourage the acceptance of the new tax system. The government is sure that they have no intention of eliminating the old tax regime gradually, which gives the additional deductions and exemptions.
After the Union Budget 2025, the zero tax ceiling will increase from Rs 3 lakh – Rs 4 lakh.
Tax and Budget 2025: The middle-class taxpayers are very happy with announcements and changes made by Finance Minister Nirmala Sitharaman, which increased the limit of the rebate into the New Tax Regime (NTR) from Rs 7 lakh – Rs 12 lakh and made the changes into the tax slabs to help those in the higher income with greater financial control.
Recently, the administration of the NDA put various incentives in place to encourage individuals to accept the new tax system. These actions show that the government wants the taxpayers to move to the new tax system. The Old Testament will also remain in place even if the new one is the recent preferred choice.
All of the taxpayers who depend upon the Old Tax Regime (OTR) for various substantial deductions are suggested to reassess their calculations of the tax into both systems and make the decision informed.
Old Tax Regime vs. New Tax Regime: Take-home salary
According to the calculations of Bank Bazaar, the taxpayer having a taxable amount of Rs. 15 lakh has to pay Rs. 1.09 lakh as tax as compared to the old regime.
Similar to the new tax system, individuals making Rs 18 lakh could save money on taxes:
New Tax Regime 2024
- Rs. 3 – Rs. 7 lakh: Rs. 20,000
- Rs.7 – to Rs.10 lakh: Rs 30,000
- Rs.10 lakh – Rs.12 lakh: Rs 30,000
- Rs. 15 lakh – Rs. 18 lakh: Rs. 90,000
- Rs.12 lakh – Rs.15 lakh: Rs 60,000
Total tax in the current regime: Rs 230,000
New Tax Regime 2025
Under the new tax regime, the savings for the person who earns Rs 1,800,000 are as follows:
- Rs 4 lakh – Rs 8 lakh: Rs 20,000
- Rs 16 lakh – Rs 18 lakh: Rs 40,000
- Rs 8 lakh – Rs 12 lakh: Rs 40,000
- Rs 12 lakh – Rs 16 lakh: Rs 60,000
- Total tax into regime: Rs 160,000
New Tax Regime: Changes and Additions Following Budget 2025
The tax slabs will be revised into the new tax framework following Budget 2025. The nominees on the salaries are not required to pay the taxes on the income of Rs. 4 lakh. Those who hold earnings of Rs 4 lakh to Rs 8 lakh have to pay 5% of the tax. The rate will then increase to 10% for the income of the Rs 8 – the Rs 12 lakh income range. The rate of the tax for the Rs 12 – Rs 16 lakh, Rs 16 – Rs 20 lakh, and Rs 20 – Rs 24 lakh income is 15%, 20%, and 25%.
The rate and the tax slabs are as follows:
- Rs.0 – Rs. 04 lakh: 0%
- Rs. 04-Rs. 08 lakh: 5%
- Rs.8- Rs.12 lakh: 10%
- Rs.12- Rs.16 lakh: 15%
- Rs.16- Rs.20 lakh: 20%
- Rs.20- Rs.24 lakh: 25%
- Above Rs.24 lakh: 30%
New Tax Regime: How tax slabs were changed
The laws of the tax have changed in the following ways.
- From Rs 3 lakh – Rs 4 lakh, the ceiling of the zero tax has been raised.
- The 5% tax has been increased from Rs 3 lakh – Rs 7 lakh – Rs 4 lakh to Rs 8 lakh.
- The tax slab of 10%, which has been applied between Rs 7 lakh – Rs 10 lakh, has now changed from Rs 8 lakh to Rs 12 lakh.
- The tax slab of 30% for income over Rs. 15 lakh has now been further divided into the below tax slabs:
- For the income between Rs 16 lakh – Rs 20 lakh, the 20% tax is now applied.
- Previously the 15% tax bracket, which has been applicable for Rs 12 lakh – Rs 15 lakh, has now changed to Rs 12 lakh – Rs 16 lakh.
- The 25% tax will be charged on the income between Rs 20 lakh – Rs 24 lakh.
- The income above Rs 24 lakh is now taxed at 30%.
Old Tax Regime: Is it still appropriate for anyone?
If the person is eligible for enough tax-saving deductions under the last tax structure, it may still be the option of the most cost-effective.
The exemption level in the new tax regime was increased from Rs 3 lakh to Rs 4 lakh in the Budget 2025–2026. The old regime’s basic income exemption threshold of Rs 2.5 lakh has not changed. Therefore, the exemption level in the last tax regime was Rs 3 lakh for senior people aged 60-80 years and Rs 5 lakh for super senior individuals who are aged 80 and above then.
As per the value research, last year’s tax regime will be profitable if the mixed deductions pass the mentioned amount into the table. Otherwise, the new regime is a good choice it gives simplicity by the reduction of paperwork, lower tax rates, and fewer computations.
| Annual income | Deductions | Old regime (Tax Liability) | New regime (Tax Liability) |
| Up to 12.75 Lakh | Check the New Tax Regime | – | – |
| Rs.15 lakh | Rs.5,43,750 | Rs.97,500 | Rs.97,500 |
| Rs.18 lakh | Rs.6,41,667 | Rs.1,50,800 | Rs.1,50,800 |
| Rs.20 lakh | Rs.7,08,333 | Rs.1,92,400 | Rs.1,92,400 |
| Rs.25 lakh | Rs.8,00,000 | Rs.3,19,800 | Rs.3,19,800 |
| Rs.30 lakh | Rs.8,00,000 | Rs.4,75,800 | Rs.4,75,800 |
| Rs.40 lakh | Rs.8,00,000 | Rs.7,87,800 | Rs.7,87,800 |
Tax deductions above Rs 15 lakhs
According to the explanation of value education, it is suggested that all the people with salaries between Rs 15 and Rs 18 lakh seek a deduction of Rs 5-6.5 lakh, or about one-third of their income. By the use of many tax-saving strategies, including investments under Section 80C, NPS, health insurance, and HRA, one can easily achieve this goal.
However, it is very tough to get a deduction if your income is above Rs 18 lakh. Therefore, people can check the New Tax Regime.
Note: It is advised by all the tax experts that the people with the fixed salary can find their total exemptions and deductions in the last tax system before finalizing their choice.