Widely read:
हिंदी में भी पढ़ें 
Yet another budget day and yet another terrible day for the old tax regime.
This year's full budget gave the new tax regime further ammo to stake its claim as the better alternative.
The first shot was fired when the revised tax slab in the new tax regime reduced tax liability for someone in the 30 per cent tax bracket by Rs 10,000. The second was when finance minister Nirmala Sitharaman announced an increase in standard deduction from Rs 50,000 to Rs 75,000, lowering a further Rs 7,500 in taxes.
Combined, those in the 30 per cent tax bracket will now pay Rs 17,500 less in taxes under the new tax regime.
Revised new tax regime
| New tax regime (existing) | Rate of tax | New tax regime (revised) | Rate of tax |
|---|---|---|---|
| Up to Rs 3 lakh | 0% | Up to Rs 3 lakh | 0% |
| Rs 3-6 lakh | 5% | Rs 3-7 lakh | 5% |
| Rs 6-9 lakh | 10% | Rs 7-10 lakh | 10% |
| Rs 9-12 lakh | 15% | Rs 10-12 lakh | 15% |
| Rs 12-15 lakh | 20% | Rs 12-15 lakh | 20% |
| Above Rs 15 lakh | 30% | Above Rs 15 lakh | 30% |
Having said that, does the new tax regime really win hands down when compared to the old system? Not really. Or not yet at least. It still depends upon the amount of deductions you can claim.
So, let's look at the major deductions available under both tax regimes for a resident individual under 60.
Major deductions available under both tax regimes
| Deductions | Old Tax Regime (Rs) | New Tax Regime (Rs) |
|---|---|---|
| Standard deduction | 50,000 | 75,000 |
| 80C investments | 1,50,000 | - |
| Self contribution to NPS | 50,000 | - |
| Interest on home loan | 2,00,000 | - |
| Medical insurance | 25,000 | - |
| Total | 4,75,000 | 75,000 |
We have excluded HRA (house rent allowance) as the deduction varies from person to person, the salary structure and the amount of rent you pay. However, note that it is available only in the old tax regime.
Now that you know what deductions are available under each tax regime, let's look at which is better for you.
Old or new? Which tax regime is better for you
Choose the old tax regime if your deductions are more than the needed amount
| Income before any deductions (Rs) | Deductions under new tax regime (Rs) | Deductions needed under old tax regime (Rs) | Tax liability (Rs) |
|---|---|---|---|
| 6 lakh | 75,000 | 1,00,000 | - |
| 7 lakh | 75,000 | 2,00,000 | - |
| 8 lakh | 75,000 | 2,50,000 | 22,500 |
| 9 lakh | 75,000 | 3,00,000 | 32,500 |
| 10 lakh | 75,000 | 3,50,000 | 42,500 |
| 12 lakh | 75,000 | 4,18,750 | 68,750 |
| 14 lakh | 75,000 | 4,37,500 | 1,05,000 |
| 15 lakh | 75,000 | 4,58,333 | 1,25,000 |
| 20 lakh | 75,000 | 4,83,333 | 2,67,500 |
Still confused? Here's what you need to do:
Step 1: Calculate your total income before any deductions.
Step 2: If the deduction amount is more than the amount mentioned in the table, pick the old tax regime. If not, go with the newer one.
For instance, if your annual income is Rs 10 lakh and you can claim deductions (HRA + 80C investments + Medical insurance + Home loan + Contribution to NPS + Standard deduction) of Rs 3.5 lakh or more, the old regime is your friend. If it doesn't add up to this amount, stick with the new regime.
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