New Delhi, April 25, 2025: With the ITR filing season for FY 2024–25 officially underway, taxpayers are once again faced with the crucial decision of choosing between the old and new income tax regimes. While the government’s push for the new tax regime has made it the default option, many salaried individuals still find the old system more beneficial — especially those who actively utilize deductions and exemptions.

Despite recent updates making income up to ₹12 lakh tax-free in the new regime, there are specific scenarios where the old tax regime can help you save more. Let’s explore four key situations where the old system may be the smarter choice.

1. You Invest in Tax-Saving Instruments

If you regularly invest in tax-deductible schemes under Sections 80C, 80D, 80G, or 80DD — such as ELSS, life insurance, PPF, medical insurance, or donations — the old regime offers better tax savings. These sections allow you to claim deductions up to ₹1.5 lakh and more, significantly reducing your taxable income.

In contrast, the new regime eliminates most deductions, with limited benefits allowed only under specific sections like 80CCD(2), 80JJAA, or 80CCH.

2. You Live on Rent and Receive HRA

For salaried employees staying in rented accommodation, the House Rent Allowance (HRA) under Section 10(13A) is a major tax saver in the old regime. Depending on your salary structure and rent paid, you can claim substantial HRA exemption.

However, under the new tax regime, HRA exemption is not allowed, making the old regime more suitable if you are paying a significant amount in rent.

3. You Fall in the Higher Income Tax Bracket

In the old regime, the 30% highest tax rate kicks in once your income crosses ₹10 lakh. But in the new regime, this top tax rate applies only after ₹15 lakh. While that sounds like an advantage for the new regime, it doesn’t always translate into savings.

If your income is already in the higher bracket and you're eligible for various deductions, the old regime might result in lower effective tax liability after factoring in all the available exemptions.

4. Tax Calculators Show Lower Tax in Old Regime

Every taxpayer's situation is different. Therefore, before filing, it’s advisable to use a reliable tax calculator to compare both regimes. If the calculator shows that you owe less tax under the old regime, then that’s the one to go for — regardless of the newer system's simplified structure.

Final Word

The new tax regime may be simpler, but simplicity doesn’t always mean savings. The old regime continues to hold strong for those who plan their investments, insurance, and housing smartly. Use digital tools, compare both options, and make an informed decision to ensure maximum tax benefit.