Which Tax Regime Is Better for ₹30 Lakh Income?
Which Tax Regime Is Better for ₹30 Lakh Income?
Old vs New Regime Comparison for FY 2024–25 | AY 2025–26
If you’re earning a high income—say, ₹30 lakh annually—you’re likely wondering:
“Should I go with the New Tax Regime or stick with the Old one?”
The short answer is:
💡 If you have deductions above ₹4–5 lakh, the Old Regime could be more tax-efficient.
Otherwise, the New Regime may offer better simplicity and lower overall tax.
Let’s compare both in detail.
📘 Step 1: Understand the Basics
🔹 Old Tax Regime
• Higher tax rates
• All deductions/exemptions allowed:
o 80C (₹1.5L)
o 80D (₹25K–₹50K)
o HRA, LTA, home loan interest, NPS, etc.
🔹 New Tax Regime (Default for FY 2024–25)
• Lower tax rates
• Only standard deduction of ₹50,000 and employer NPS (80CCD(2)) allowed
• No 80C, 80D, HRA, home loan deductions
🧮 Step 2: Tax Comparison for ₹30 Lakh Income (FY 2024–25)
✅ Scenario A: New Tax Regime (with only ₹50,000 standard deduction)
| Income | ₹30,00,000 |
| Less: Standard Deduction | ₹50,000 |
| Taxable Income | ₹29,50,000 |
| Tax Calculation (as per slab rates) | ₹5,10,000 |
| Add: Cess @ 4% | ₹20,400 |
Total Tax Payable = ₹5,30,400
✅ Scenario B: Old Regime with ₹5.5 Lakh Deductions (80C, 80D, HRA, Home Loan, etc.)
| Income | ₹30,00,000 |
| Less: Deductions (80C, 80D, etc.) | ₹5,50,000 |
| Less: Standard Deduction | ₹50,000 |
| Taxable Income | ₹24,00,000 |
| Tax as per the old slab | ₹4,72,500 |
| Add: Cess @ 4% | ₹18,900 |
Total Tax Payable = ₹4,91,400
✅ Scenario C: Old Regime with Only ₹2 Lakh Deductions
| Total Deductions + Std. Deduction | ₹2.5L |
| Taxable Income | ₹27.5L |
| Tax with Cess | ~₹5.63L |
✅ New Regime wins in this case
🎯 Which Regime is Better at ₹30 Lakh?
| Deduction Amount | Better Regime |
| Less than ₹2.5 lakh | ✅ New Regime |
| ₹2.5L – ₹4 lakh | Depends (very close) |
| More than ₹4 lakh | ✅ Old Regime |
| More than ₹5 lakh | ✅ Definitely Old Regime |
🧠 Additional Considerations
• ✔️ New regime offers ease: No paperwork, no investment commitments
• ✔️ Old regime offers tax planning flexibility: Great for those with home loans, rent, and insurance
Final Words
For someone earning ₹30 lakh annually, the Old Tax Regime becomes more beneficial only when your deductions cross ₹4–5 lakh. If not, the New Tax Regime gives a cleaner and simpler option with lower upfront tax.
