Course: FAC 121 Direct Taxes (Section 2)

Group number: 2
Assignment - 1

Assignment Title: Comparative Study of New Tax Regime vis-a-vis

Old Tax Regime
Submitted to faculty: Professor Ruja Sutaria
Date of Submission:16th November, 2025

Student Details

Enrollment no. Name of the Student Name of the Program

AU2310329 Chelsi Sidpara BBA Honours

Introduction

The Indian taxation system has undergone numerous reforms in recent years for simplification
and justice. The largest of these reforms was the introduction of the New Tax Regime in Budget
2020. A key change came in the Union Budget of 2020, which presented an optional
individual income tax regime intended to simplify the taxation structure by providing
reduced tax rates but eliminating the majority of deductions and allowances available under
the previous regime. Previously, the majority of individuals used to pay under the Old Tax
Regime where there were several deductions and exemptions like investment under Section 80C,
medical insurance under 80D, HRA, and interest on the home loan. Overall, while this system
benefitted people in that it allowed for tax savings, it also made the tax return process
complicated and promoted unnecessary tax saving instruments.

To simplify the system, minimize paperwork and ease the taxpayer burden, the government has
initiated the New Tax Regime under Section 115BAC of the Income Tax Act. This new tax
regime had lower taxation rates but had fewer exemptions and deductions. The intention was to
provide taxpayers with a choice — either stick to the Old Regime (with exemptions) or opt for
the New Regime (with lower rates). With time, the government has revised the New Regime to
make it more desirable and even made it the default one from FY 2023-24 onwards.

In order to make this new regime more desirable, the government has introduced five
modifications in Budget 2023, which remain valid in FY 2024-2025 as there is no modification
in Interim Budget 2024.

Comparison between Old and New Tax Regime

1)​ Tax Slabs

●​ Simplified Income Tax Slabs for New Regime- FY 2024-25 (AY 2025-26)
The new tax regime has been adopted with changed tax slabs having an exemption limit of 3
lakh, as under:

New Tax Slab for PY 2024-25 Tax Rate

Up to Rs. 3 lakhs Nil

Rs. 3,00,001 - Rs. 7 lakhs 5%

Rs. 7,00,001 - Rs. 10 lakhs 10%

Rs. 10,00,001 - Rs. 12 lakhs 15%

 Rs. 12,00,001 - Rs. 15 lakhs 20%

More than 15 lakhs 30%

●​ Income Tax Slabs for Old Regime- FY 2024-25 (AY 2025-26)

Tax Slab (less than 60 years) Tax Rate

Upto Rs 2,50,000 Nil

Rs 2,50,000 - Rs 5,00,000 5%

Rs 5,00,000 - 10,00,000 20%

More than Rs 10,00,000 30%

Tax Slab for Senior citizen Tax Rate

(60 - 80 years )

Upto Rs 3,00,000 Nil

Rs 3,00,000 - Rs 5,00,000 5%

Rs 5,00,000 - 10,00,000 20%

More than Rs 10,00,000 30%

Tax Slab for Super Senior citizen Tax Rate

(80 and more than 80 years )

Upto Rs 5,00,000 Nil

Rs 5,00,000 - 10,00,000 20%

More than Rs 10,00,000 30%

2)​ Rebate Limit

Higher Rebate Limit: Rebate limit provided under Section 87A was increased under the new
regime of tax as compared to the old tax regime. The lowest level of income is Basic Exemption
and no tax has to be paid on it.
 ●​ Old Tax Regime
The old regime was charging the individuals with an income up to 5 lakh as zero tax. An
individual can claim a rebate of 12,500 if income is upto 5 lakh.

●​ New Tax Regime

It charged the individuals with an income not exceeding 7 lakh. In this way, individuals with an
income of 7 lakh or less will not pay any taxes according to the new system. An individual can
claim a rebate of 20,000if income is upto 7 lakh.

3)​ Surcharge Tax

An income tax surcharge is an added charge that a person has to pay on income tax. It is an
additional imposition of tax on those taxpayers who have a higher inflow of income in a specific
fiscal year.

However NTR is much cheaper if the income is above 2 Crore since the surcharge in the NTR is
25% while OTR has 37%. It is at this that the NTR is very attractive to business owners and high
level professionals

Taxable Income Limit Surcharge Rate (under old Surcharge Rate (under new
tax regime) tax regime)

Less than 50 lakhs Nil Nil

50 lakhs to 1 Crore 10% 10%

1 Crore to 2 Crore 15% 15%

2 Crore to 5 Crore 25% 25%

More than 5 crore 37% 25%

4)​ Standard Deduction

The amount of this standard deduction is constant that can be claimed by tax payers to
their gross earnings in order to reduce their taxable income.

The typical deduction on the salary of individuals under both the new as well as old
regime for the FY 2024-25 (AY 2025-26):

●​ Old Tax Regime: Rs. 50,000

 ●​ New Tax Regime: Rs. 75,000

5)​ Tax deductions in the New Tax Regime

Following deductions will be available to a taxpayer opting for the New Tax Regime u/s
115BAC:
●​ Section 24(b) – Deduction from Income from House Property on interest paid on housing
loan:

Nature of Property Purpose of loan Allowable (Maximum limit)

Let Out Construction or purchase of Actual value without any

the house property limit

●​ Deduction towards contribution made by an employer to the Pension Scheme of Central

Government:

Employers of all categories 14% of salary is the Deduction limit

Tax deductions in the Old Tax Regime

●​ Section 24(b) – Deduction from Income from House Property on interest paid on housing
loan & housing improvement loan:

Nature of When loan Purpose of loan Allowable

Property was taken (Maximum limit)

Self- On or after Construction or purchase of house ₹ 2,00,000

Occupied 1/04/1999 property ​

On or after For Repairs of house property ​ ₹ 30,000

1/04/1999

Before Construction or purchase of house ₹ 30,000

1/04/1999 property

Before For Repairs of house property ₹ 30,000

1/04/1999
Let Out Any time Construction or purchase of house Actual value
property without any limit

●​ Tax deductions specified under Chapter VIA of the Income Tax Act

Deduction towards payments made to

80C Life Insurance Premium Combined deduction limit

Provident Fund of ₹ 1,50,000
Subscription to certain equity shares
Tuition Fees
National Savings Certificate
Housing Loan Principal
Other various items

80CCC Annuity plan of LIC or other insurer towards

Pension Scheme

80CCD(1) Pension Scheme of Central Government

Section 80CCD(1B) Deduction towards payments Deduction limit of ₹ 50,000

made to Pension Scheme of
Central Government,
excluding deduction claimed
under 80CCD (1)

Section 80D Deduction towards payments made to Health Insurance

Premium & Preventive Health check up

For Self / Spouse or Rs 25,000 (₹ 50,000 if any

Dependent Children person is a Senior Citizen)

Rs 5,000 for preventive

health check up, included in
above limit

For Parents Rs 25,000 (₹50,000 if any

person is a Senior Citizen)
 Rs 5,000 for preventive
health check up, included in
above limit

Deduction towards Medical Expenditure incurred on a Senior Citizen, if no premium is paid

on health insurance coverage

For Self / Spouse or Dependent Children Deduction limit of Rs 50,000

For Parents Deduction limit of Rs 50,000

Section 80DD Deduction towards payments Flat deduction of​

made towards maintenance or ₹ 75,000​
medical treatment of a available for a person with
Disabled Dependent or Paid / Disability, irrespective of
Deposited any amount under expense incurred.
relevant approved scheme The deduction is​
₹ 1,25,000​
if the person has Severe
Disability (80% or more).

Section 80DDB Deduction towards payments Deduction limit of

made towards Medical ₹ 40,000
treatment of Self or (₹ 1,00,000 if Senior Citizen)
Dependant for specified
diseases

And many more deductions in the old tax regime…

 6)​ Other Deductions

Basis of Differentiation Old Tax Regime New Tax Regime

House Rent Allowance Exemption Allowed, subject to limits Not available

u/s Section 10(13A) - for prescribed
employees receiving HRA

House Rent deduction u/s 80GG - Allowed, subject to limits Not available
for employees not receiving HRA prescribed
and self employed taxpayers

Home Loan Interest on Self Up to Rs. 2 lakh of deduction is No deduction is

Occupied Property allowed allowed

Home Loan Interest on Let Out Entire interest can be claimed as a Entire interest can be
Property deduction. claimed as a
deduction.

Additional interest under section Up to Rs. 50,000 can be claimed No deduction is

80EE as an additional deduction. allowed

Additional interest under section Up to Rs. 1,50,000 can be claimed No deduction is

80EEA as an additional deduction allowed

Investment deductions u/s 80C Up to Rs. 1.5 lakhs can be Not available
claimed as a deduction.
Popular investments are life
insurance policy, ELSS, 5 years
fixed deposits, etc.

Employer's Contribution to Up to 10% of basic pay allowed Up to 14% of basic

National Pension System (NPS) pay allowed
section 80CCD(2)

Medical insurance premium under Up to Rs. 25,000 for self and Not available
section 80D family.
Up to Rs. 25,000 for senior
citizens.
Up to Rs. 50,000 for senior
citizens

Education loan deduction under Entire interest can be claimed as a Not available
section 80E deduction.
 Section 80U Disability Up to Rs. 1.25 lakhs deduction Not available
available

Donations to charitable Deduction available subject to Not available

institutions under section 80G limits prescribed

Donations to political parties Entire donation can be Not available

u/s 80GGC claimed as a deduction

All contributions to Agniveer Allowed Allowed

Corpus Fund - 80CCH

Leave Travel Allowance Allowed within the limits Not available

(LTA) prescribed

Entertainment Allowance and Allowed Not available

Professional Tax

Perquisites for official Allowed Allowed

purposes

Deduction on Family Pension Max deduction of Rs. 15,000 Max deduction of Rs. 25,000
Income

Gifts received up to Rs Allowed Allowed

50,000

Daily Allowance Allowed Allowed

Conveyance Allowance Allowed Allowed

7)​ Compliance and Administrative Burden

8)​ Who got benefitted ?

9)​ Suggestion
10)​ Conclusion

Anandan, C. (2025, September 4). Old vs New Tax Regime - Which is Better for Salaried

Employees? Cleartax. [Link]

Anandan, C. (2025b, November 4). Income Tax Slabs FY 2025-26(AY 2026-27) Explained with

New Tax Regime Rates. Cleartax. [Link]

Sengar, N. S. (2024, May 20). Investments, Payments or Incomes On Which You Get Tax

Benefits; Check ITR Filing Checklist. News18.

[Link]

[Link]

Old Regime vs New Regime 2025: Which Tax Regime is Better for You? (n.d.). Indiafilings.

[Link]

Motiani, P. (2023, July 31). What is Section 115BAC of the Income-tax Act? The Economic

Times.

[Link]

ax-act/articleshow/[Link]

IndiaFilings. (2025, August 22). New tax regime: Recent income tax changes in India.

[Link]

Rao, B. R., Dr., M, R., Pattanashetti, S., M, S., M, S. K., Kunam, S. R., Khodanpur, S. S., Pain,

S., Sharma, S., CMS Business School, & JAIN (Deemed-To-Be-University), Bangalore,

India. (2025). Comparative Analysis of New VS Old Tax Regime. In International

Journal of Scientific Research & Engineering Trends (Vol. 11, Issue 1) [Journal-article].

[Link]
Referencer | Income Tax | Income Tax Rates | AY 2025-26 | FY 2024-25 | Normal tax rates

applicable to a resident individual. (n.d.-b).

[Link]

Prasad Patil, & Sanket Gharat. (2025). A study on the impact of the new vs. old tax regime on

individual assessee under the Income Tax Act, 1961. The Academic, 3.

[Link]

M, K. K., M, R., M, M., & Seshank, P. (2025). A study on the new income tax system in

comparison to the old income tax system. In International Journal of Multidisciplinary

Research in Science, Engineering and Technology, International Journal of

Multidisciplinary Research in Science, Engineering and Technology (Vol. 8, Issue 4).

[Link]

The Tipping Point Analysis: Who Benefits and When

Recent News & Policy Developments (2023-2024)

[Link]

[Link]
vs-new-tax-regime-which-is-better

Short form table right or wrong wala

[Link]

Suggestion [Link]
Conclusion [Link]