Budget 2025 discussion: Does the new tax regime really suit every taxpayer?

Union Budget 2025 has sweetened the new tax regime even more. With a higher basic exemption limit and lower tax rates, the buzz suggests that the new regime is now the better choice for most taxpayers. At first glance, it does seem like a no-brainer. Why complicate things with deductions when the new regime offers lower tax rates and a simpler structure? But before you make the switch, let us double-check the numbers. The old regime still allows tax-saving deductions; if you can claim enough of them, it might still be the more tax-efficient option. So, when is the old tax regime more beneficial for you? When does the old regime win? The table below shows the minimum deductions required in the old regime for your tax liability to be the same as in the new regime. If you can claim more than this, the old regime is the better choice. Annual income (Rs) Deductions needed to match new regime (Rs) Tax liability in old regime (Rs) Tax liability in new regime (Rs) Up to 12.75 Lakh Opt for new-regime, it's a no-brainer - 0 15 lakh 5,43,750 97,500 97,500 18 lakh 6,41,667 1,50,800 1,50,800 20 lakh

This article was originally published on February 04, 2025.