Income Tax Return Filing 2025: Who is Generally Suitable for New Tax Regime?

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For AY 2025-26, the New Regime of Income Tax under section 115BAC(1A) is suitable for the following types of individuals, depending on their income structure, deductions, and preferences:

✅ Who is Generally Suitable for the New Tax Regime (115BAC(1A))?

  1. Individuals with No Major Deductions or Exemptions
    • Those who do not claim deductions like:
      • 80C (LIC, PPF, ELSS, etc.)
      • 80D (Medical Insurance)
      • 24(b) (Home Loan Interest for Self-Occupied Property)
      • HRA (House Rent Allowance)
      • LTA (Leave Travel Allowance)
    • And also not availing:
      • Standard deductions beyond ₹50,000
      • Any specific exemptions or allowances
  2. Young Professionals or Freshers
    • Salary income without significant investments
    • No home loans or major tax-saving instruments
  3. Freelancers or Self-Employed with Lower Expenses
    • Who prefer simple taxation without maintaining proofs for deductions
  4. Senior Citizens with Pension Income & Minimal Deductions
    • If they are not claiming substantial deductions under old regime
  5. High-Income Individuals Who Hit Surcharge Limits
    • Under the new regime, surcharge rates are reduced for certain incomes (notably for income above ₹5 crore)

✅ Key Benefits of New Regime (AY 2025-26)

Income Slab (₹) Tax Rate (%)
0 – 3,00,000 Nil
3,00,001 – 6,00,000 5%
6,00,001 – 9,00,000 10%
9,00,001 – 12,00,000 15%
12,00,001 – 15,00,000 20%
Above 15,00,000 30%

Note:

  • Standard Deduction of ₹50,000 is now available even in New Regime.
  • Rebate under 87A is available for income up to ₹7 lakh, making tax payable zero in such cases.
  • Surcharge benefits available for income above ₹5 crore.

✅ Who Should Avoid New Regime?

  • Individuals with significant tax-saving investments (e.g., 80C, 80D, 80CCD(1B))
  • Those paying interest on home loans (for self-occupied property)
  • People claiming HRA or LTA
  • Senior citizens with medical expenses eligible under old regime
  • Individuals relying on deductions for tax relief

✅ Practical Suggestion

Before choosing the new regime:

✔️ Do a comparative calculation under Old vs New regime based on your income, deductions, and exemptions.
✔️ For salaried individuals, many employers now default to the new regime unless you declare otherwise.
✔️ You can choose the regime every year if you’re a salaried person (for business income, option is more restrictive).

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