India's new tax regime launches with revised slabs

Starting April 1, 2025, a new income tax regime in India will introduce updated tax slabs. Under this regime, individuals earning up to ₹12 lakh will not have to pay any tax. Some taxpayers still prefer the old tax regime, which offers various deductions and exemptions that can lower taxable income. The old system allows deductions for several expenses. For example, contributions to the Employees Provident Fund, house rent allowances, and health insurance premiums are included. There are also specific deductions for investments in the National Pension System and interest earned on savings accounts. This makes the old regime attractive for those who can take advantage of these deductions. However, the new tax regime has lower tax rates for incomes up to ₹24 lakh, which may encourage some to switch. While it offers fewer deductions, it includes a standard deduction from salary and exemptions on certain reimbursements. For instance, employer contributions to the National Pension System are treated differently in both regimes. Choosing between the two regimes depends on individual financial situations. For taxpayers with fewer deductions, the new regime may result in higher savings. Those who have fully utilized their deductions might find the new tax system simpler and more beneficial since it requires less documentation.