New vs Old Tax Regime: Choose Wisely for FY 2025-26 Tax Planning
Personal Finance
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News18•01-02-2026, 09:27
New vs Old Tax Regime: Choose Wisely for FY 2025-26 Tax Planning
- •The Union Budget 2026-27 is expected to maintain current income tax slabs, making the new tax regime the default option, though the old regime remains available.
- •Compare tax slabs: New regime offers a basic exemption up to 4 lakh and a standard deduction of 75,000 rupees, while the old regime has 2.5 lakh exemption and 50,000 standard deduction.
- •Deductions are key: The old regime allows over 70 deductions (HRA, 80C, Home Loan Interest), beneficial for high-income earners; the new regime has limited deductions but lower rates.
- •Section 80C is a major advantage of the old regime, allowing up to 1.5 lakh rupees in deductions for investments like PPF, ELSS, NPS, significantly reducing taxable income.
- •Tax planning tips: New regime is better for low incomes (up to 12 lakh); medium incomes (12-20 lakh) should compare deductions; high incomes (20 lakh+) generally benefit more from the old regime.
Why It Matters: Carefully compare new and old tax regimes based on income and deductions for optimal tax planning.
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