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Choosing between the old and new tax regimes for FY26 can significantly impact your tax savings. The new, simplified tax regime is more attractive for most taxpayers, offering a higher basic exemption limit and fewer deductions. Here’s a breakdown:
New Tax Regime:
- Basic exemption limit raised to ₹4 lakh.
- Tax rebate limit increased to ₹12 lakh.
- No tax on income up to ₹12.75 lakh.
- Simple structure with fewer deductions.
Old Tax Regime:
- Higher tax rates.
- Allows various deductions like 80C, 80D, and home loan interest.
- Suitable if your deductions exceed ₹8 lakh for incomes over ₹24 lakh.
Key Considerations:
- For incomes up to ₹12.75 lakh, the new regime is generally better due to the higher exemption and rebate limits.
- For incomes above ₹24 lakh, if your deductions are substantial, the old regime may still offer better savings.
- Assess your specific deductions and potential tax savings before making a decision.
Ultimately, the choice depends on your individual financial situation and the deductions you can claim. Evaluate both regimes and select the one that maximizes your tax savings.
