The season for filing Income Tax Returns (ITR) has started. Over 1 crore taxpayers have already filed their returns. Many people are now trying to understand which income tax regime—old or new—is better for them.

The main reason behind this confusion is a big announcement made by the government in the Union Budget 2025. In the budget presented in February this year, the government said that taxpayers with an income of up to ₹12 lakh will not have to pay any tax. The government also made changes to the tax slabs in the new tax regime. Many taxpayers think that this new rule has already come into effect. But that is not true. This is a misunderstanding.

Tax-Free Income up to ₹12 Lakh from Next Year

The rule of not paying tax on income up to ₹12 lakh will start from the financial year 2025-26. This means it will not apply to income between April 1, 2024, and March 31, 2025. So, this year people will not get this benefit. If you are going to file your income tax return now, the old rules will apply.

Chartered Accountant Balwant Jain said, “Before filing the return, people should check which tax system is better—old or new. For people who get more HRA, the old system is better.”

You Can Still Get Tax Deductions in FY25 Return

People can still get many tax benefits while filing returns for FY25. If you have done tax-saving investments during this year, you can get deductions.

Under section 80C, you can save tax on ₹1.5 lakh. You can also get deductions on health insurance under section 80D, and home loan interest under section 24B. People who live in rented houses can claim HRA. Also, everyone can claim ₹50,000 as standard deduction. All these together can give ₹3–4 lakh deduction.

Old Tax System is Better for Some

Tax expert Neeraj Aggarwal said that the old tax system is better for some people. He said, “You can get ₹1.5 lakh deduction under 80C, up to ₹75,000 under 80D, HRA, and also home loan and education loan deductions under the old system.”

Choose the Right System Before Filing

He said, “If your income is ₹15 lakh per year, the old system is better only if you claim ₹4 lakh deduction. If your income is ₹20 lakh, the old system is better if you claim ₹4.5 lakh deduction.” So, check your tax and then choose the old or new system. The new system will give more benefits from next year.