At What Salary Limit Is the New Tax Regime Beneficial?
At What Salary Limit Is the New Tax Regime Beneficial?
New vs Old Regime: Ideal Income Levels to Choose Section 115BAC | FY 2024–25
Choosing between the old and new tax regimes can make a big difference in your tax outgo and savings strategy. Many salaried individuals and professionals often ask:
“At what income level is the new tax regime more beneficial?”
“Is there a salary point beyond which I should shift to the new regime?”
Let’s break it down clearly with examples, tax slabs, and decision-making logic.
✅ Understanding the Two Regimes
🔹 Old Tax Regime
• Higher tax rates
• Allows popular deductions like:
- 80C (₹1.5L), 80D, HRA, LTA
- Home loan interest (Section 24)
- NPS (80CCD(1B))
🔹 New Tax Regime (Section 115BAC)
• Lower tax rates
• Only a few deductions allowed:
- Standard Deduction (₹50,000)
- Employer NPS contribution (80CCD(2))
- Agniveer corpus deduction (80CCH)
📊 Income Tax Slabs Under the New Regime (FY 2024–25)
| Annual Income (₹) | 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 | 25% |
| Above 15,00,000 | 30% |
🧮 When Is the New Tax Regime More Beneficial?
The new tax regime is beneficial if:
• Your total deductions are less than ₹2.5 – ₹3 lakh
• You don’t invest in tax-saving instruments (PPF, ELSS, etc.)
• You live in your own house (no HRA claim)
• You don’t have a home loan or an education loan
• You don’t claim 80D for health insurance or 80E for education loan interest
💡 Benchmark Salary Ranges: New Regime Advantage
Here’s a simple decision matrix based on typical tax-saving behaviour:
| Salary Range (₹) | Deductions < ₹2.5L | Deductions > ₹3L | Better Regime |
| ₹5L – ₹7L | ✅ New | ❌ Old better | Depends |
| ₹7L – ₹10L | ✅ New | ❌ Old better | Case-specific |
| ₹10L – ₹15L | ✅ New | ❌ Old better | Compare both |
| ₹15L – ₹25L | ✅ New | ❌ Old better | Old saves more if investing actively |
| ₹25L+ | ✅ New if minimal deductions | ❌ Old better | Check surcharge impact too |
👉 In short, the new tax regime is beneficial for people:
• With minimal deductions
• Having simplified salary structures
• Earning up to ₹10L–₹12L with no investments
📘 Example Comparison – ₹10L Salary
| Particulars | Old Regime | New Regime |
| Deductions Claimed | ₹2.5L (80C, HRA, etc.) | ₹50K only |
| Taxable Income | ₹7.5L | ₹9.5L |
| Tax After Cess | ₹54,600 | ₹41,600 |
| ✅ Better Regime | New (saves ₹13K) | If fewer deductions |
🧠 How to Decide for Yourself?
1. List your actual deductions: 80C, 80D, HRA, 24(b), NPS
2. Reduce them from your gross salary
3. Calculate tax under both regimes
4. Choose the one with lower tax outgo
Or simply use a regime comparison calculator or consult a CA.
✅ Final Thoughts
There is no fixed salary point where the new regime is always better.
It depends on your ability and willingness to invest and claim deductions.
In general:
• New regime suits low-investment, high-income individuals
• Old regime suits people who claim multiple deductions
