Question 1

Which tax regime is better - Old or New?

Accepted Answer

It depends on your deductions. New regime is better for incomes below Rs 15 lakh with minimal deductions. Old regime benefits those with significant deductions like HRA, home loan interest, 80C, 80D, etc. totaling more than Rs 3-4 lakh.

Question 2

Can I switch between old and new tax regime every year?

Accepted Answer

Yes, salaried employees can switch between regimes every year. Business owners opting out of new regime can only switch once back to old regime, but this is a one-time option.

Question 3

What is the standard deduction in each regime?

Accepted Answer

New regime offers Rs 75,000 standard deduction (FY 2024-25), while old regime offers Rs 50,000. However, old regime allows many additional deductions that new regime does not.

Question 4

What is Section 87A rebate and how does it differ between regimes?

Accepted Answer

Section 87A provides tax rebate for lower incomes. In new regime, you get Rs 25,000 rebate if taxable income is up to Rs 7 lakh. In old regime, rebate is Rs 12,500 for income up to Rs 5 lakh.

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