Old vs new tax regime: Which is better for you? A comparison after Union Budget 2025

Old vs new tax regime: Which is better for you? A comparison after Union Budget 2025

By HT News Desk

Feb 03, 2025 01:55 AM IST

Under the proposed Union Budget 2025, a ₹60,000 rebate applies to incomes up to ₹12 lakh, enhancing the attractiveness of the new tax regime.

Old vs new tax regime: The income tax slabs proposed in the Union Budget 2025 under the new tax regime include a ₹60,000 rebate for income up to ₹12 lakh

( ₹12.75 lakh for salaried individuals) under Section 87A.Budget 2025 offers ₹60,000 rebate for incomes up to ₹12 lakh under new tax regime. (Representational image)(REUTERS)

This makes the old tax regime, which has 5 per cent, 20 per cent, and 30 per cent slabs and allows deductions for tax-saving investments, less attractive in comparison.

Big Tax Relief in Budget 2025: No Tax for Incomes Up to ₹12 Lakh! 👉 Explore the Impact!

According to a report by The Times of India, the finance ministry has consistently supported the idea of separating investment and savings schemes from income tax liabilities, allowing taxpayers to make independent choices based on their own benefits.

The new tax regime offers more benefits than the old one for incomes up to ₹12 lakh ( ₹12.75 lakh for salaried individuals), even when utilising the full deductions and exemptions of ₹5,75,000 and 30 per cent of salary as house rent allowance.

However, it’s unlikely for someone earning ₹12.75 lakh to invest in tax-saving schemes, claim house rent allowance ( ₹3,82,500), and take the standard deduction, adding up to ₹9,57,000, The Economic Times reported.

Know details of differences between old and new tax regimes:The new tax regime results in higher taxes after ₹12 lakh income. Staying with the old tax regime is beneficial only if the taxpayer invests ₹5.25 lakh in tax-saving schemes.

For people earning ₹13.75 lakh without HRA, the old tax system has a lower tax of ₹57,500 compared to ₹75,000 under the new system. This is also true for income up to ₹15.75 lakh, but it requires investing ₹5.25 lakh in savings schemes. Even with HRA, the old system is better.

For people earning ₹20 lakh ( ₹20.75 lakh for salaried ones), the new tax regime is better than the old one. Even after investing ₹5.25 lakh in savings schemes, the old system would require ₹2.4 lakh in tax, while the new system would only require ₹2 lakh, with no deductions allowed.

Quoting experts, The Financial Express reported that for people earning above ₹24.75 lakh, the new tax regime is beneficial only if their total deductions and exemptions excluding the standard deduction are under ₹8 lakh.

Under the new tax regime, a taxpayer with an income of ₹24 lakh will save ₹60,000. In the old regime, after investing ₹5.25 lakh in savings schemes, the tax would be ₹3.60 lakh, compared to ₹3 lakh under the new regime.

Budget gives broadband boost to edu spectrum

 Budget gives broadband boost to edu spectrum 

TEAM TOI 02.02.2025

Finance minister Nirmala Sitharaman announced a significant increase in allocation for the education sector, focusing on last-mile broadband connectivity in rural schools that were worst hit by insufficient internet coverage during Covid. Infrastructure expansion for IITs, medical education and AI in learning were also among the Budget highlights. 

The digital push is expected to boost broadband connectivity at all govt secondary schools and primary health centres in rural areas. Five of the newer IITs — in Jammu, Bhilai, Dharwad, Palakkad and Tirupati — would be expanded to accommodate 6,500 more students over the next five years. And, ahead of the Bihar assembly polls scheduled later this year, IIT-Patna is set to receive funds for enhanced infrastructure, including hostels.

 “The total number of students in 23 IITs has doubled in the past decade from 65,000 to 1.4 lakh,” said FM Sitharaman. The IIT budget has increased to Rs 11,349 crore from Rs 10,467 crore. To strengthen research, 10,000 fellowships for technology research in IITs and IISc will be provided over five years. Five national centres for excellence (CoEs) in skilling will also be set up, along with 50,000 Atal Tinkering Labs in govt schools to pro mote scientific curiosity. A CoE in AI for education will also be established with a Rs 500-crore outlay. Sitharaman said the edu cation ministry will get Rs 1.3 lakh crore, up from Rs 1.1 lakh crore in 2024-25. Of this, Rs 50,067 crore is for higher education and Rs 78,572 crore for school education. Education minister Dharmendra Pradhan called the Budget a “leapfrogging moment” for the sector.

“With poor, youth, farmers and women as the pillars, this Budget will accelerate spending, spur growth and nurture research, innovation, entrepreneurship,” he said. While allocations for UGC, NCERT and IIMs have increased, funding for IISERs and World Class Institutions has seen cuts.

தணிக்கை துறை தலைமை இயக்குனர் ஆனந்த் பொறுப்பேற்பு

தணிக்கை துறை தலைமை இயக்குனர் ஆனந்த் பொறுப்பேற்பு

ADDED : பிப் 02, 2025 12:58 AM

சென்னை:சென்னையில் உள்ள இந்திய தணிக்கை மற்றும் கணக்கு துறையின் தலைமை இயக்குனராக ஆனந்த் பொறுப்பேற்றார். இந்த பதவிக்கு முன், தமிழகம் மற்றும் புதுச்சேரியின் முதன்மை தலைமை கணக்காளர் தணிக்கை - 2 ஆக பதவி வகித்தார்.

மேலும், முதன்மை தலைமை கணக்காளர் தணிக்கை - 2 ஆக, கேரளா, வடகிழக்கு மாநிலங்கள், அசாம் மாநிலங்களிலும் பணிபுரிந்துள்ளார். ஆனந்த், 1994 சென்னை கால்நடை மருத்துவ கல்லுாரியில் பட்டம் பெற்றவர்.

அதேபோல, தமிழகம், புதுச்சேரி முதன்மை கணக்கு தணிக்கை அதிகாரியாக திருப்பதி வெங்கடசாமியும் பொறுப்பேற்றார்.

இதற்கு முன் அவர், சென்னையில் உள்ள மத்திய கணக்கு தணிக்கை அலுவலக தலைமை இயக்குனராகவும், மஹாராஷ்டிராவின் நாக்பூர் அலுவலகத்தில் தணிக்கை அதிகாரியாகவும் பணிபுரிந்துள்ளார்.

NEWS TODAY 2.2.2025

 

FM charitable to trusts; registration tenure is doubled

FM charitable to trusts; registration tenure is doubled 

TEAM TOI 02.02.2025

For the first time in years, the Budget provisions have made life easier for charitable trusts and institutions. For instance, the period of validity of registration of a trust (registration is essential to claim tax exemption) has been extended from the current five years to 10 years. However, this applies only to smaller trusts with income below Rs 5 crore. Second, minor errors in the registration application will not result in deregistration of the trust. This is a significant development as deregistration meant that the fair market value of the assets of a trust becomes chargeable to tax. In Metro cities, trusts such as those engaged in education or medical have significant assets like land or buildings, and an ‘exit tax’ on deregistration was suicidal. 

But reading between the lines is crucial. Gautam Nayak, tax partner at CNK & Associates, states, “When trusts have income (before exemption) of less than Rs 5 crore in each of the two years preceding the year of making application for renewal, registration will be granted for 10 years. This will apply to cases where application is made after March 31, 2025, and will not apply to provisional registration of new trusts, where registration is granted for 3 years. Small trusts whose approval was valid till Mar 31, 2026, will still have to make an application for renewal by Sept 30, 2025, but the renewal granted to them will then be for 10 years.” He adds that trusts would have to reapply every five years for approval under 80G. Only if the trust is approved can donors get a tax benefit (albeit under the old regime). “The reason for cancellation of a registration by the commissioner would now only be in a case of false or incorrect information – the mere fact that the application was incomplete cannot be a ground for cancellation (which has significant adverse consequences of a heavy tax liability on the fair market value of assets of the trust),” adds Nayak.

Currently, a benefit provided to ‘specified persons’ by charitable trusts can result in loss of exemption to the extent of the benefit provided. The list of specified persons included a substantial contributor (a person who had made aggregate donations of more than Rs 50,000 

since the inception of the trust), his relatives and concerns in which he held a substantial interest. “This ridiculously low limit of Rs 50,000 had remained unchanged for 40 years since 1985, and trusts found it impossible to identify or obtain details of such donors, their relatives and concerns. The limit is now being changed to Rs 1 lakh for donations during the year, or aggregate of Rs 10 lakh since inception. Further, relatives or concerns of such donors are excluded from the list of specified persons. While this will provide much-needed relief to trusts in maintaining records, the retention of period of aggregation of donations from inception of the trust will still be problematic for trusts which are several decades old,” concludes Nayak

HOW UPI CAME TO RULE INDIA’S DIGITAL PAYMENTS

 HOW UPI CAME TO RULE INDIA’S DIGITAL PAYMENTS

Launched less than 10 years ago, UPI now accounts for over 80% of the country’s digital transactions — revolutionising how India’s richest and poorest pay. But the digital payment landscape has seen some other tectonic shifts, too

In nil-tax bracket? Why a raise won’t help you much

In nil-tax bracket? Why a raise won’t help you much 

TEAM TOI 02.02.2025 

The Budget announcement that an annual income of Rs 12 lakh will not be taxed has been met with cheer. For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account standard deduction of Rs 75,000. 

But what if there is an increment around the corner for your fine performance at work that pushes you into a higher tax slab? 

Suppose, your boss gives you a 10% hike on Rs 12.75 lakh, to, say, about Rs 14 lakh a year? 

The tax department could then take away Rs 82,000. This would leave you with Rs 13.18 lakh in hand — still a small hike, but nothing to jump about. If your bosses are even more impressed (you might want to pray they are not) and you get a 20% hike on Rs 12.75 lakh, to, say, about Rs 15.3 lakh, this could mean that you might be shelling out tax of about Rs 1.02 lakh, leaving you a less exciting Rs 14.27 lakh in hand. This could mean you could end up with less in the pocket than you first thought.