Welcome to the new financial year 2025-26.

This year you can get the benefit of revised tax slabs announced in the Union Budget, where income to 12.75 lacs is tax-free.

It’s clear that the government wants more and more people to opt for the new tax regime. In FY23-24, more than 72% of taxpayers opted for the new tax regime. With this year’s announcement, the people filing the old tax regime next year are expected to be in the low single digits.

For lots of folks, the new system is easier and leaves more money in your pocket.

The table below shows the minimum deductions required in the old regime for your tax liability to be the same as in the new regime. If you can claim more than this, the old regime is the better choice.

𝗙𝗼𝗿 𝗽𝗲𝗼𝗽𝗹𝗲 𝗯𝗲𝗹𝗼𝘄 𝟯𝟬 𝗹𝗮𝗰𝘀 𝗼𝗳 𝗮𝗻𝗻𝘂𝗮𝗹 𝗶𝗻𝗰𝗼𝗺𝗲, the deduction as a % of total income is almost one third of total income. Achieving such high amounts may be impractical.
It is not advisable to lock your money in 80C investments like PPF, ELSS, etc., just for the sake of saving a few rupees in taxes. Only invest as per your goals.

𝗪𝗵𝗼 𝘀𝗵𝗼𝘂𝗹𝗱 𝗰𝗼𝗻𝘀𝗶𝗱𝗲𝗿 𝗢𝗹𝗱 𝗿𝗲𝗴𝗶𝗺𝗲?
• High earners with a salary greater than 40 lacs AND who can claim deductions of 8 lacs in total by utilising 80C (1.5 lacs) + 80D (50k) + home loan interest (2 lacs) + NPS (50k + 10% of basic) + HRA + donations, etc. will find the old regime beneficial.

𝗪𝗵𝗼 𝘀𝗵𝗼𝘂𝗹𝗱 𝗰𝗼𝗻𝘀𝗶𝗱𝗲𝗿 𝗡𝗲𝘄 𝗿𝗲𝗴𝗶𝗺𝗲?
• People with no home loan, minimal NPS, and 80 C contributions. Overall deductions are less than shown in the table.
• Annual Salary to 12.75 lacs.

Next week we will share the deductions available for salaried employees in the new tax regime. Are there any? Stay tuned.