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The new regime has lower rates and a ₹75,000 standard deduction but allows almost no deductions. The old regime allows HRA, 80C, 80D, home loan interest and others with a ₹50,000 standard deduction. Which is cheaper depends on your numbers.
ITR
Old or new regime for a salaried person with deductions
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Provisions
Sec 115BAC, Income-tax Act 1961 (now Sec 202); Sec 80C, Income-tax Act 1961 (now Sec 123); Sec 80D, Income-tax Act 1961 (now Sec 126)
Analysis
Take salary of ₹15,00,000. New regime: ₹14,25,000 taxable, tax ₹93,750 plus cess. Old regime with HRA exemption ₹1,80,000, 80C ₹1,50,000, 80D ₹25,000 and standard deduction ₹50,000 gives ₹10,95,000 taxable and tax of ₹1,41,000 plus cess. Here the new regime wins. The old regime usually wins only with large HRA and home loan interest together, so always compute both.
Close
- List all deductions you can prove.
- Compute taxable income and tax under both regimes.
- Include cess and any rebate.
- Pick the lower tax.
- Choose it in the ITR filed by the due date.
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