Question 1

Which is better - Old Tax Regime or New Tax Regime?

Accepted Answer

It depends on your deductions. New Regime is better if your total deductions (80C, 80D, HRA, home loan interest, etc.) are less than Rs 3.75 lakh. Old Regime is better if you have significant deductions. Generally, salaried individuals with home loans and investments prefer Old Regime, while those with minimal deductions prefer New Regime. Use this calculator to compare both scenarios for your situation.

Question 2

What is the Section 87A rebate and who is eligible?

Accepted Answer

Section 87A provides a rebate of up to Rs 25,000 for individuals with taxable income up to Rs 7 lakh under New Regime (Rs 5 lakh under Old Regime). This means: New Regime - income up to Rs 7.75 lakh (Rs 7L + Rs 75K standard deduction) is effectively tax-free. Old Regime - income up to Rs 5 lakh is tax-free. The rebate is available only to resident individuals.

Question 3

What is the Rs 50,000/Rs 75,000 standard deduction for salaried individuals?

Accepted Answer

Standard deduction is a flat deduction from salary income. Budget 2024 increased it to Rs 75,000 under New Regime (from Rs 50,000). Under Old Regime, it remains Rs 50,000. This deduction is automatic - you don't need to invest or show any expense. It's available only to salaried individuals and pensioners, not for business/professional income.

Question 4

What are the current income tax slabs for FY 2024-25?

Accepted Answer

New Regime: 0-3L (0%), 3-7L (5%), 7-10L (10%), 10-12L (15%), 12-15L (20%), Above 15L (30%). Old Regime: 0-2.5L (0%), 2.5-5L (5%), 5-10L (20%), Above 10L (30%). New Regime slabs are more beneficial for lower incomes, while Old Regime allows deductions. Both regimes add 4% Health & Education Cess on the tax amount.

Question 5

How do I switch between Old and New Tax Regime?

Accepted Answer

Salaried employees can switch between regimes every year by informing their employer and selecting regime in ITR. Business/Professional income earners can switch only once in lifetime (if they've opted for New Regime). Default regime is New Regime from FY 2023-24 onwards. If you don't specify, New Regime applies automatically. Always calculate both before deciding.

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