Should You Choose the Old or New Tax Regime for ITR Filing 2025?

New Delhi, Aug 3 (NationPress) The extension of the income tax return (ITR) filing deadline to September 15 provides taxpayers with additional time to determine their choice between the old and new tax regimes.

For salaried individuals or pensioners without business income, it is possible to switch tax regimes at any point before submitting their ITR each year, simply by selecting the appropriate option on the ITR-1 or ITR-2 form.

However, for those with commercial or professional income, the rules are more stringent. You may only revert to the old tax regime once in your lifetime, and this decision is final. To make this change, you must submit Form 10-IEA before the filing deadline. If you fail to do so, the new tax regime will be automatically applied.

If you find yourself uncertain about which regime to select, it's crucial to understand that House Rent Allowance (HRA), Leave Travel Allowance (LTA), and deductions under Sections 80C to 80U, along with home loan interest under Section 24(b), are exclusively accessible through the old tax regime.

While the new regime offers fewer deductions, individuals with taxable income up to Rs 12 lakh receive a full tax rebate. If your taxable income surpasses Rs 12 lakh, it will be taxed according to the applicable slabs.

The tax slabs are structured as follows: zero tax for the first Rs 4 lakh, 5% tax on income between Rs 4 lakh and Rs 8 lakh, 10% on Rs 8 lakh to Rs 12 lakh, and 15% on Rs 12 lakh to Rs 16 lakh, and so on.

Notably, the new regime provides limited benefits under Sections 80CCD(2) and 80CCH(2), excluding the wider 80C category favored by salaried taxpayers.

Before making a decision, evaluate your income, salary structure, and tax-saving investments. Salaried individuals with minimal deductions may find the new regime advantageous, whereas those who can claim significant deductions under Sections 80C, 80D, HRA, or home loan interest might benefit more from the old regime.

Moreover, keep in mind that losses from house property, capital gains, or business income cannot be carried forward in the new regime. This could impact future tax liabilities, so weigh this factor carefully before making a choice.

As a general guideline, tax professionals suggest that the old tax regime may only be beneficial for those eligible to claim a Rs 2 lakh deduction for home loan interest under Section 24(b) or a substantial HRA. For most others, the deductions available in the new regime may outweigh those of the old.