Budget 2025: With taxpayers eyeing big relief in Nirmala Sitharaman's speech, here's your complete guide to new vs old tax regime

The number of tax slabs in the old tax regime is 4. In her last budget speech in July 2024, Sitharaman made no change in the regime. The limit of Rs 1.50 lakh tax benefits under Section 80C of the Income Tax Act was also kept the same. 

Here are the tax slabs and the tax a taxpayer needs to pay in different tax slabs of the old tax regime. 

Up to Rs 5 lakh- Nil  Rs 2.5-Rs 5 lakh- 5%  Rs 5 lakh-Rs 10 lakh- 20%  Above Rs 10 lakh- 30%

 

Ever since its introduction in the 2020 Union Budget, the Centre's focus has been on the new tax regime. During her budget speech in July 2024, the Finance Minister increased the number of tax slabs in the new tax regime to 6.

Here are the tax slabs and the tax one needs to pay in the new tax regime.   0-Rs 3 lakh- nil tax Rs 3 lakh-Rs 7 lakh- 5 per cent  Rs 7 lakh-Rs 10 lakh- 10 per cent  Rs 10 lakh-Rs 12 lakh- 15 per cent  Rs 12 lakh-Rs 15 lakh- 20 per cent  Above Rs 15 lakh- 30 per cent

Another important announcement during Sitharaman's July 2024 budget speech was that she increased the standard deduction limit for taxpayers following the new regime to Rs 75,000 from Rs 50,000.

The old tax regime provides more deductions to taxpayers. But they need to invest money in schemes with long lock-in investment schemes to avail those benefits or need to pay premiums of insurance policies, among other tax saving tactics. Such benefits are not available to taxpayers following the new tax regime. Old regime taxpayers have over 70 exemptions and deductions. The most important of them is Section 80C of the Income Tax Act, where one can save up to Rs 1.50 lakh in a financial year.

However, new regime taxpayers get a full tax rebate on income up to Rs 7 lakh. So, practically, they don't need to pay any tax up to that income.

We are quoting here a BankBazaar.com study which shows that where taxpayers in different income slabs pay higher tax.

As in the chart, you can see that the taxpayer in the old tax regime needs to have deductions of at least Rs 1,50,000 to get edge over a new regime taxpayer.

The old tax regime follower needs to have deductions of at least Rs 2,50,000 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 33,800 each.  

The old tax regime follower needs to have deductions of at least Rs 3,87,500 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 88,400 each.

The old tax regime follower needs to have deductions of at least Rs 4,08,333 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 1,30,000 each.

The old tax regime follower needs to have deductions of at least Rs 4,33,333 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 1,53,400 each.

The old tax regime follower needs to have deductions of at least Rs 4,33,333 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 4,52,400 each.

The old tax regime follower needs to have deductions of at least Rs 4,33,333 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 12,14,400 each.

The old tax regime follower needs to have deductions of at least Rs 4,33,333 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 21,93,620 each.

The old tax regime follower needs to have deductions of at least Rs 4,33,333 to break even with the new tax regime taxpayer. In that case, both will pay a tax of Rs 30,51,260 each.

Deduction Needed For Equal Tax Under OR & NR         Income Deduction (Before SD) Deduction Rate (Before SD) OR Tax NR Tax (FY24-25) 1,00,000 -  -  -  -  2,00,000 -  -  -  -  3,00,000 -  --  -  -  4,00,000 -  --  -  -  5,00,000 -  -  -  -  6,00,000 50,000 8.33% -  -  7,00,000 1,50,000 21.43% -  -  8,00,000 2,00,000 25.00% 23,400 23,400 9,00,000 2,50,000 27.78% 33,800 33,800 10,00,000 3,00,000 30.00% 44,200 44,200 11,00,000 3,43,750 31.25% 55,900 55,900 12,00,000 3,68,750 30.73% 71,500 71,500 13,00,000 3,87,500 29.81% 88,400 88,400 14,00,000 3,87,500 27.68% 1,09,200 1,09,200 15,00,000 4,08,333 27.22% 1,30,000 1,30,000 16,00,000 4,33,333 30.21% 1,53,400 1,53,400 17,00,000 4,33,333 28.43% 1,84,600 1,84,600 18,00,000 4,33,333 26.85% 2,15,800 2,15,800 19,00,000 4,33,333 25.44% 2,47,000 2,47,000 20,00,000 4,33,333 24.17% 2,96,400 2,96,400 21,00,000 4,33,333 23.02% 3,09,400 3,09,400 22,00,000 4,33,333 21.97% 3,40,600 3,40,600 23,00,000 4,33,333 21.01% 3,71,800 3,71,800 24,00,000 4,33,333 20.14% 4,03,000 4,03,000 25,00,000 4,33,333 19.33% 4,52,400 4,52,400 30,00,000 4,33,333 14.44% 5,90,200 5,90,200 35,00,000 4,33,333 12.38% 7,46,200 7,46,200 40,00,000 4,33,333 10.83% 9,02,200 9,02,200 45,00,000 4,33,333 9.63% 10,58,200 10,58,200 50,00,000 4,33,333 8.67% 12,14,400 12,14,400 55,00,000 3,13,250 5.70% 15,07,220 15,07,220 60,00,000 4,33,333 7.22% 16,78,820 16,78,820 65,00,000 4,33,333 6.67% 18,50,420 18,50,420 70,00,000 4,33,333 6.19% 20,22,020 20,22,020 75,00,000 4,33,333 5.78% 21,93,620 21,93,620 80,00,000 4,33,333 5.42% 23,65,220 23,65,220 85,00,000 4,33,333 5.10% 25,36,820 25,36,820 90,00,000 4,33,333 4.81% 27,08,420 27,08,420 95,00,000 4,33,333 4.56% 28,80,020 28,80,020 1,00,00,000 4,33,333 4.33% 30,51,260 30,51,260 Standard deduction of 50,000 not included in above deduction. Compiled on BankBazaar Income Tax Calculator. https://bit.ly/4cTYEQB