Lidea Feed

Home Loan & Insurance Benefits: Which Tax Regime is Better for Those Earning Over Rs13 Lakh—Old or New?

Sagar J February 27, 2025 02:20 PM

Old vs. New Tax Regime: Which One Offers More Savings?

When the salary gets credited at the beginning of the month, it's a moment of joy. However, the thought of income tax often brings concern. While the government has provided relief to many by offering tax rebates for incomes up to ₹12 lakh, taxation remains a complex topic—especially when tax slabs change.

For individuals leveraging deductions on home loans, insurance (80C, 80D), and NPS, the question arises: Should they opt for the Old Tax Regime or switch to the New Tax Regime? Let's break it down with a straightforward comparison.

Old vs. New Tax Regime: A Detailed Breakdown

Old Tax Regime

Offers a standard deduction of ₹50,000
Allows deductions for 80C (investments), 80D (health insurance), home loan interest, and NPS
Provides tax exemption on incomes up to ₹5 lakh
If deductions range between ₹1.75 lakh to ₹4.25 lakh, taxpayers can reduce their taxable income significantly

New Tax Regime

Provides a higher standard deduction of ₹75,000
Does not allow additional deductions under 80C, 80D, or NPS
Offers tax exemption on incomes up to ₹12 lakh

Which Tax Regime is More Beneficial?

The table below compares tax liabilities under both regimes for different income levels:

Annual Income (₹)	Tax under Old Regime (₹)	Tax under New Regime (₹)	Difference (₹)	Better Regime
10,00,000	18,200	0	18,200	New
13,00,000	80,600	26,000	54,600	New
15,00,000	1,24,800	97,500	27,300	New
15,50,000	1,40,400	1,05,300	35,100	New
17,00,000	1,87,200	1,30,000	57,200	New
20,00,000	2,80,800	1,92,400	88,400	New
30,00,000	5,92,800	4,75,800	1,17,000	New

Key Takeaways

Even if taxpayers claim deductions between ₹1.75 lakh and ₹4.25 lakh, the New Tax Regime still provides higher savings. To make the Old Tax Regime worthwhile, individuals would need to increase their savings significantly, which may not always be feasible.

What Do Experts Say?

Tax and investment expert Balwant Jain, in an interview with Money9Live, pointed out that the Old Tax Regime could be advantageous if HRA (House Rent Allowance) is included.

"For those with a high salary, HRA can be significant—sometimes up to 50% of the basic salary. In such cases, the Old Tax Regime may offer better benefits," he explained.

Final Verdict

For most taxpayers, especially those without HRA benefits, the New Tax Regime is the better choice due to lower tax liabilities and simplified rules. However, individuals with substantial HRA claims may find the Old Regime more beneficial.

Would you like additional insights or a comparison based on specific deductions?