As the Income tax return (ITR) filing season for Assessment Year (AY) 2025–26 begins, one big question is on every taxpayer’s mind — Should I choose the old tax regime or the new one?
With recent updates and income tax rule changes, it’s important to understand the differences before you file your ITR.
What’s the Difference Between Old and New Tax Regime?
Here’s a side-by-side comparison:
| Income Slab | Old Regime Tax Rate | New Regime Tax Rate |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil (Up to ₹3 lakh) |
| ₹2.5L – ₹5 lakh | 5% | 5% (₹3L – ₹6L) |
| ₹5L – ₹6L | 20% | 10% |
| ₹6L – ₹9L | 20% | 10% |
| ₹9L – ₹12L | 30% | 15% |
| ₹12L – ₹15L | 30% | 20% |
| Above ₹15 lakh | 30% | 30% |
Key Notes:
- The new regime is now the default tax system from FY 2024–25 (AY 2025–26).
- Under the new regime, a rebate is available under Section 87A if your income is up to ₹7 lakh — you pay ZERO tax.
- Old regime allows deductions like HRA, 80C, 80D, LTA, home loan interest, etc.
Also Read: Home Loan Tax Benefits FY 2025-26: Save Up to ₹3.5 Lakh With These Deductions
Which Tax Regime One Should You Choose While Filing ITR 2025?
Use this simple logic:
Choose the Old Regime if:
- You claim many deductions (like HRA, 80C, NPS, insurance, etc.)
- You pay rent or have a home loan.
- You invest regularly in PPF, ELSS, LIC, etc.
Choose the New Regime if:
- You don’t have many deductions.
- You want a simpler tax structure.
- Your taxable income is up to ₹7 lakh — you get full rebate.
Remember: If you don’t tell your employer which regime you choose, they will deduct tax under the new regime by default.
How to Calculate Your Tax?
Step 1: Calculate your total income.
Step 2: Subtract eligible deductions (if using old regime).
Step 3: Apply the tax rates of both regimes.
Step 4: Compare the final tax payable and pick the lower one.
You can also use free online tax calculators or consult a CA for help.
ITR Forms to Use (AY 2025–26)
| ITR Form | Who Should Use It |
|---|---|
| ITR-1 | Salaried individuals (income up to ₹50L), one house property |
| ITR-2 | Individuals with capital gains, multiple properties |
| ITR-3 | Professionals or business income |
| ITR-4 | Presumptive income taxpayers (like freelancers, small biz) |
Documents Needed to File ITR
- PAN and Aadhaar
- Form 16 (from employer)
- Interest certificates from banks
- Investment proof (LIC, ELSS, PPF, etc.)
- Rent receipts (for HRA claim)
- Form 26AS & AIS (for tax credit and income summary)
File early to avoid last-minute rush and mistakes!
Choosing the right tax regime in 2025 can save you money — or cost you if you pick blindly. If you’re someone with lots of investments and deductions, the old regime may still be better. But if you like a simple structure and don’t claim many deductions, the new regime might save you time and effort.
Before filing your return, compare both regimes using your actual numbers.
Comments are closed.