Tax Deductions: Under the Income Tax Act of India, there are many deductions available in the Old Tax Regime that can help reduce your tax liability. Compared to the New Tax Regime, which offers lower tax rates but does not offer the option of deductions, the Old Tax Regime is more beneficial for individuals and families who want to maximize their savings through investments and eligible expenses.
Key Tax Deductions for FY25 (Assessment Year 2025-26):
1. Section 80C: Popular Investment Deductions
• Maximum Limit: ₹1,50,000
• Eligible Investments Include:
• Public Provident Fund (PPF)
• Equity Linked Savings Scheme (ELSS)
• Life Insurance premiums
• Baccalaureate tuition fees
• Principal repayment of Home loans
• Five-year fixed deposits
• Contribution in Sukanya Samriddhi Yojana
• Employee Provident Fund (EPF) contribution more than ₹ 2.5 lakh
2. Section 80D: Medical Insurance Premiums
• For self, spouse and dependent children: ₹25,000
• Senior Citizens (Self or Parents): ₹50,000
• Very Senior Citizens (80+ age): ₹50,000
• Extra deduction for Preventive Health Check-ups: ₹5,000
3. Section 80TTA & 80TTB: Interest on Savings
• Section 80TTA: Deduction up to ₹10,000 on interest earned from savings account.
• Section 80TTB: Deduction up to ₹50,000 for senior citizens (Savings, Fixed Deposits or Recurring Deposits).
4. Section 24(b): Interest on Home Loans
• Self-occupied property: ₹2 lakh
• Let-out property: No upper limit
6. Standard Deduction
• Standard deduction for FY25: ₹50,000
7. House Rent Allowance (HRA)
• Deduction is given on the basis of specific conditions, such as rent paid and city of residence.
8. Section 80GGC & 80GGB: Political Contributions
• 80GGC: For individuals who contribute to political parties.
• 80GGB: Deduction on similar contributions for corporates.
9. Section 87A: Tax Rebate
• Those whose taxable income is up to ₹5 lakh, they get rebate under Section 87A which eliminates their tax liability.
10. Section 80E: Education Loan Interest
• There is no upper limit for interest paid on education loans.
Upcoming Changes in Tax Law
The government is planning to introduce an Income Tax Bill in the Union Budget 2025-26, which will simplify tax laws and reduce their length by approximately 60%.
Conclusion
The Old Tax Regime is still an attractive option for taxpayers who want to reduce their taxable income by taking advantage of available deductions. But it is important to evaluate your financial situation and compare the benefits of the Old and New Tax Regime to make an informed decision.
