Old vs New Tax Regime_ Which One Saves You More in 2025
                     Old vs New Tax Regime: Which 
One Saves You More in 2025?
As the financial year 2024–25 unfolds and Union Budget 2025 brings minor 
but impactful tweaks, taxpayers across India are again faced with a familiar 
question: Should I choose the Old Tax Regime or the Ne Tax Regime hile 
filing my taxes? While both regimes aim to reduce your tax burden, each 
does so in very different ways.
This guide by Rits Capital breaks down the latest Income Tax Slabs, 
available deductions, and comparison points to help you decide which 
option is better for your ITR filing in 2025.
Understanding the Two Tax 
Regimes
The Old Tax Regime is the traditional tax system, offering a wide range of 
deductions and exemptions to reduce your taxable income. You can claim 
deductions under sections like 80C (investments), 80D (health insurance), 
HRA (House Rent Allowance), and more.
The New Tax Regime, introduced in FY 2020-21, simplifies the structure by 
offering
lower Income Tax Slabs but removes most deductions and exemptions. The 
goal is to simplify the tax filing process and benefit those who do not invest 
heavily in tax-saving instruments.
Income Tax Slabs for FY 2024-25 (AY 
2025-26)
New Tax Regime (Default as per Union Budget 
2025)
Annual income Tax rate
Up to ₹3,00,000 0%
₹3,00,001 – ₹6,00,000 5%
₹6,00,001 – ₹9,00,000 10%
₹9,00,001 – ₹12,00,000 15%
₹12,00,001-₹15,00,000 15%
Above ₹15,00,000 30%
Standard Deduction: ₹50,000 (introduced from FY 2023–24)
Rebate under Section 87A: Available for income up to ₹7,00,000 
(zero tax payable)
Old Tax Regime
Annual Income (₹) Tax Rate
Up to ₹2,50,000 0%
₹2,50,001 – ₹5,00,000 5%
₹5,00,001 – ₹10,00,000 20%
Above ₹10,00,000 30%
Standard Deduction: Not applicable earlier; may vary based on 
employment Multiple deductions under Sections 80C, 80D, HRA, 
etc.
Rebate under Section 87A: Applicable for income up to ₹5,00,000
Key Differences Between Old and New 
Tax Regime
Feature Old Tax Regime New Tax Regime
Tax Rates Higher rates Lower rates
Deductions (80C, Available Not available
80D, HRA, etc.)
Standard Deduction Limited/Not automatic ₹50,000 for salaried 
and pensioners
Ideal for Those with Those with few or 
high no deductions
deductions
Complexity Higher (due to Lower (simple structure)
multiple 
exemptions)
HRA, LTA, Home Available Not applicable
Loan Benefits
Applicability Optional – must Default regime 
choose annually unless opted out
Example: Comparing Old vs New Tax Regime in 
2025
Let’s compare Old vs New Tax Regime with a real-world example to 
understand the potential savings.
Scenario:
Gross Salary: ₹12,00,000 per 
annum Deductions under Old 
Regime:
Section 80C (EPF, PPF, ELSS, 
etc.): ₹1,50,000
Section 80D (Health Insurance): 
₹25,000 HRA exemption: ₹1,00,000
Standard Deduction: ₹50,000
1. Old Tax Regime 
Calculation:
Taxable Income = ₹12,00,000 – (₹1,50,000 + ₹25,000 + ₹1,00,000 + 
₹50,000)
Net Taxable = ₹8,75,000
Tax (as per slab) = ₹87,500 (approx., excluding cess)
2. New Tax Regime 
Calculation:
Taxable Income = ₹12,00,000 – ₹50,000 (Standard Deduction) = 
₹11,50,000 Tax (as per slab):
0–3L: Nil
3–6L: ₹15,000
6–9L: ₹30,000
9–11.5L: ₹37,500
Total = ₹82,500 (approx., excluding cess)
Conclusion:
Despite lower deductions, the New Tax Regime comes close in tax liability in 
this case due to lower rates. However, if more deductions (like home loan 
interest) were claimed, the Old Regime might offer greater savings.
Pros and Cons of Each Tax Regime
Old Tax Regime
Pros:
High tax savings for investors and policyholders
Best for salaried individuals with rent, loan EMIs, and insurance 
premiums
Suitable for families with multiple exemptions (education loan, 
children’s tuition, etc.)
Cons:
Complex documentation for tax filing
Requires investment discipline to claim deductions
New Tax Regime
Pros:
Hassle-free tax filing
No need to maintain proofs of 
investments Encourages flexibility in 
financial planning
Cons:
No incentives to save or invest
Loss of key benefits like HRA and 
home loan interest
How to Choose the Right 
Tax Regime in 2025
Before you make a choice, follow these 
three simple steps:
1.Calculate Your Total Income
Include all sources: salary, business income, 
capital gains, and rental income.
2.Assess Your Deductions
List your investments, insurance premiums, home loan interest, education 
expenses, and medical insurance.
3.Use a Tax Calculator
There are many online tools (including one on the Rits Capital website) 
that help compare Old vs New Tax Regime side-by-side.
Note: You must declare your choice while filing your income tax return. 
Salaried employees can inform their employer in April but are allowed to 
change their choice during ITR filing.
Final Verdict: Which One Saves 
You More?
There’s no one-size-fits-all answer. The right choice depends on your 
income level, spending habits, and ability to claim deductions.
Choose the Old Tax Regime if you:
Have home loan 
EMI Claim HRA
Invest in 80C 
schemes
Pay life/health insurance 
premiums Opt for the New Tax 
Regime if you:
Don’t claim major 
deductions Prefer 
simplicity in tax filing
Have minimal investment 
obligations
Let Rits Capital Help 
You Decide
At Rits Capital, we specialize in 
tax planning, investment 
strategies, and personal
finance. If you’re unsure whether the Old or New Tax Regime is right for you 
in 2025, our experts can provide a detailed comparison tailored to your 
financial situation.
Book a consultation today and take the guesswork out of your taxes!
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