Tax Regime Comparison: Old vs New Tax Regime in Budget 2025

The Union Budget 2025 has introduced revised income tax slabs under the new tax regime, providing relief to salaried taxpayers. However, many individuals remain uncertain about whether to opt for the new regime vs old regime tax benefits. This article provides a detailed tax regime comparison, highlighting the difference between old and new tax regime, tax calculations, and the advantages of old tax regime over the new tax regime benefits.

How Will Income Up To Rs 12 Lakh Be Tax-Free?

The income tax calculation old vs new regime has changed significantly. According to the Budget 2025 document, taxpayers earning up to Rs 12 lakh can benefit from rebates, effectively making their tax liability zero. Salaried individuals can avail of a standard deduction of Rs 75,000, increasing the rebate threshold to Rs 12.75 lakh.

• The rebates start at Rs 10,000 for an income of Rs 8 lakh.
• For those earning Rs 12 lakh, the rebate rises to Rs 80,000.

This makes taxation more favorable under the new tax regime, especially for middle-income earners.

Income Tax Calculation for Different Salaries

If Salary Is Rs 16 Lakh Per Annum, How Will Tax Be Calculated?

For an individual earning Rs 16 lakh per annum, tax liability is calculated as follows:

• Rs 0 to Rs 4 lakh – No tax.
• Rs 4 lakh to Rs 8 lakh (5%) – Rs 20,000 tax.
• Rs 8 lakh to Rs 12 lakh (10%) – Rs 40,000 tax.
• Rs 12 lakh to Rs 16 lakh (15%) – Rs 60,000 tax.

Total Tax Payable: Rs 1,20,000

This is Rs 50,000 less compared to the old tax system vs new tax system.

If Salary Is Rs 50 Lakh Per Annum, Then What?

For high-income individuals, the revised tax slabs in Budget 2025 provide substantial savings:

• Total tax liability: Rs 10,80,000.
• Savings compared to old regime: Rs 1,10,000.

The revised tax slab comparison old vs new ensures that more disposable income is available to high-salaried taxpayers.

What About the Old Tax Regime?

The old vs new tax system in India remains a key consideration. While the new tax regime benefits more taxpayers, the government has not announced the discontinuation of the old tax regime.

• The old tax regime advantages include deductions under Section 80C, HRA, and home loan interest.
• Nearly 75% of taxpayers have already shifted to the new tax regime.
• The government is expected to gradually phase out the old tax system.

Should You Switch from Old to New Tax Regime?

Choosing between the new tax regime vs old tax regime depends on your financial profile. Taxpayers with higher exemptions under the old regime might benefit from staying in the old tax slab.

Comparison Example

For an individual earning Rs 16 lakh with Rs 4 lakh in exemptions:

• Under the old tax regime, the taxable income is Rs 12 lakh, with a total tax of Rs 1,72,500.
• Under the new regime tax slab, the total tax payable is Rs 1,20,000, saving Rs 52,500.