New Tax Regime also comes with Tax Deductions: Things Taxpayers Should Know:

Key Details Taxpayers Should Keep in Mind While Filing Income Tax Return: New Tax Regime For filing the income tax return (ITR) for the financial year 2024-25, the Income Tax (I-T) department has released forms 1 and 4. The deadline for filing the income tax return is July 31, 2025. Taxpayers have two options using which they can file an income tax return: the old tax regime and the new tax regime. Under the old tax system, people could reduce their taxable income by claiming deductions for investments made under sections like 80C, 80D, and 80DD. However, the tax rates in this system are generally higher. While we talk about the new tax regime. It does not allow taxpayers to claim deductions under distinct provisions to reduce their taxable income. However, it offers lower tax rates.

New Tax Regime is Default Regime

The new tax regime is the default option, meaning everyone has to follow it unless they choose to opt out when filing their taxes.

Concessional Tax Rates in New Tax Regime

Concessional Rates: The new tax regime has lower tax rates than the old one. For example, people earning up to Rs. 7 lakh don't have to pay any tax, thanks to a rebate under section 87A. Tax Rates: In the 2025 Budget, it was announced that people earning up to Rs. 12 lakh won’t pay any income tax. These new rates will apply starting April 1, 2025. However, if you're filing taxes for 2024-25, the rates from the 2024 Budget apply, which are: New Tax Regime:

• Rs. 0-3 lakh: Nil
• Rs. 3-7 lakh: 5%
• Rs. 7-10 lakh: 10%
• Rs. 10-12 lakh: 15%
• Rs. 12-15 lakh: 20%
• Above Rs. 15 lakh: 30%

Old Tax Regime:

• Rs. 0-2.5 lakh: Nil
• Rs. 2.5-5 lakh: 5%
• Rs. 5-10 lakh: 20%
• Above Rs. 10 lakh: 30%

Opting New or Old Tax Regime

Intimating the Employer: Employees need to tell their employer which tax regime they choose. If they don’t, the employer will assume they are in the default tax regime and deduct tax accordingly.

Is HRA Allowed in New Tax Regime?

House Rent Allowance (HRA): Salaried people can get an HRA exemption, but this benefit is not available under the new tax regime.

What Deductions are allowed in New Tax Regime?

Deductions Allowed: Most deductions (like 80C, 80D, 80DD, and 80G) aren’t available under the new tax regime, but a few exceptions exist, such as deductions under sections 80CCD(2), 80CCH, and 80JJAA.

Can I switch between the old and new tax regimes

Switching Between Regimes: Salaried Taxpayers can switch between the old and new tax regimes every year. So, if you chose the old regime last year, you can switch to the new one this year and vice versa.