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

Budget 2025: With Finance Minister Nirmala Sitharaman set to announce budget on Saturday, February 1, 2025, crores of taxpayers are expecting significant relief in income tax slabs. But as things stand, where will pay higher tax- old tax regime or new tax regime.

ZeeBiz WebTeam | Feb 01, 2025, 10:50 AM IST

Budget 2025: Taxpayers expect huge relief in income tax slabs. The reason is it increases their consumption power and helps them fight inflation. Budget 2025 will be no exception. Since the income of central government employees may increase due to the 8th Pay Commission, private sector employees and a lot of others are expecting Finance Minister Nirmala Sitharaman to announce huge income tax benefits during her Budget 2025 speech on February 1, Saturday. Leading research firm SBI Research is expecting the government to reduce tax from 20 per cent to 15 per cent for individuals earning between Rs 10 lakh and Rs 15 lakh annually. For a taxpayer keenly following budget proceedings, such expectations are common. However, as things stand now, let us take you through various tax slabs in the old and new tax regimes and where you have to pay a higher tax. Get answers to these questions in this article.
Photos: Unsplash/Pixabay/Pexels
Calculation Courtesy: BankBazaar.com

1/18

Tax slabs in old tax regime

Tax slabs in 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. 

2/18

Tax slabs in old tax regime

Tax slabs in old tax regime

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%

 

3/18

New tax regime

New tax regime

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.

4/18

Tax slabs in new tax regime

Tax slabs in new tax regime

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

5/18

Standard deduction limit

Standard deduction limit

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.

6/18

New vs Old tax regime: Key differences

New vs Old tax regime: Key differences

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.

7/18

New tax regime rebate

New tax regime rebate

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.

8/18

Where do you pay higher tax?

Where do you pay higher tax?

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

9/18

Old vs New Tax Regime: On Rs 7 lakh income

Old vs New Tax Regime: On Rs 7 lakh income

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.

10/18

Old vs New Tax Regime: On Rs 9 lakh income

Old vs New Tax Regime: On Rs 9 lakh income

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.  

11/18

Old vs New Tax Regime: On Rs 13 lakh income

Old vs New Tax Regime: On Rs 13 lakh income

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.

12/18

Old vs New Tax Regime: On Rs 15 lakh income

Old vs New Tax Regime: On Rs 15 lakh income

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.

13/18

Old vs New Tax Regime: On Rs 16 lakh income

Old vs New Tax Regime: On Rs 16 lakh income

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.

14/18

Old vs New Tax Regime: On Rs 25 lakh income

Old vs New Tax Regime: On Rs 25 lakh income

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.

15/18

Old vs New Tax Regime: On Rs 50 lakh income

Old vs New Tax Regime: On Rs 50 lakh income

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.

16/18

Old vs New Tax Regime: On Rs 75 lakh income

Old vs New Tax Regime: On Rs 75 lakh income

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.

17/18

Old vs New Tax Regime: On Rs 1 crore income

Old vs New Tax Regime: On Rs 1 crore income

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.

18/18

Tax chart

Tax chart

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        

By accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

x