Navigating the complexities of income tax can be daunting, especially with the choice between the Old and New Tax Regimes. While the New Tax Regime touts simplicity and lower tax slabs, a closer look reveals that the Old Tax Regime, with its array of deductions and exemptions, might offer you more significant savings—potentially over ₹1 lakh! As the September 15th deadline for filing your Income Tax Return (ITR) for FY 2024-25 (AY 2025-26) approaches, it’s crucial to understand these benefits before making your choice.
The Old Tax Regime, in contrast to the more streamlined New Tax Regime, provides a robust framework of tax-saving avenues. These include well-known options like investments under Section 80C (PPF, ELSS, life insurance), health insurance premiums under Section 80D, House Rent Allowance (HRA), Leave Travel Allowance (LTA), and interest on home loans (Section 24). However, beyond these common deductions, several lesser-known provisions can dramatically reduce your tax outgo.
TaxBuddy, a leading tax advisory platform, highlights eight powerful, yet often overlooked, tax deductions that can make a substantial difference:
- Section 80GG – Rent Deduction Without HRA: Even if your salary doesn’t include HRA, you can still claim up to ₹60,000 annually for rent paid out of pocket. This is a game-changer for freelancers and consultants, requiring only the filing of Form 10BA and adherence to specific conditions. Remember, if your annual rent exceeds ₹1 lakh, your landlord’s PAN is essential.
- Section 80CCD(1B) – Extra Deduction for NPS Contributions: Already maximized your ₹1.5 lakh limit under Section 80C with PF or ELSS? You can still save an additional ₹50,000 by contributing to the National Pension Scheme (NPS). What’s more, from April 2025 onwards, contributions made for your minor child will also qualify for this benefit!
- Section 80G – Donations: Your charitable contributions can earn you a 50% or even 100% deduction, depending on the registered charity or relief fund. Ensure payments over ₹2,000 are digital, and always obtain the donee’s PAN for your ITR claim.
- Section 80D – Preventive Health Check-ups: Beyond health insurance premiums, did you know that ₹5,000 of your Section 80D limit can be claimed for preventive health check-ups? Even cash payments are allowed for this specific purpose, making it easy to save on your annual family diagnostics.
- Section 80DD/80DDB – Medical Expenses for Dependents:
- Section 80DD: If you’re caring for a disabled family member, you might be eligible for a deduction of up to ₹1,25,000, depending on the severity of the disability.
- Section 80DDB: Expenses for specified critical illnesses like cancer, dementia, or Parkinson’s can fetch you deductions up to ₹1,00,000. These deductions require a medical certificate from a prescribed authority.
- Joint Home Loan Benefits: If you co-own a home and are co-borrowers with your spouse, both of you can individually claim up to ₹2 lakh interest deduction (Section 24) and ₹1.5 lakh principal repayment deduction (Section 80C). This strategic approach can lead to a remarkable combined deduction of ₹7 lakh!
- Company-Leased Car: Opting for a car lease through your employer can be highly tax-efficient. You’re taxed only on a nominal perquisite value (₹1,800–₹2,400/month, plus ₹900 if a driver is provided), while the EMI, fuel, and maintenance costs covered by your employer remain untaxed.
- Flexi Benefit Plan: Maximize your net take-home pay by optimizing your Cost-to-Company (CTC) with non-taxable perks. These can include meal cards, fuel reimbursements, telecom bills, and even education benefits, all of which reduce your taxable income without appearing as direct income.
Tax Slab Rates – Old vs New Regime (FY 2024–25 & FY 2025–26)
| Income Slabs (₹) | Old Regime (Under 60) | Old Regime (60–80 yrs) | Old Regime (80+ yrs) | New Regime (FY 2024–25) | New Regime (FY 2025–26) |
| Up to ₹2.5 Lakhs | Nil | Nil | Nil | Nil | Nil |
| ₹2.5L – ₹3L | 5% | Nil | Nil | Nil | Nil |
| ₹3L – ₹5L | 5% | 5% | Nil | 5% | 5% |
| ₹5L – ₹6L | 20% | 20% | 20% | 5% | 5% |
| ₹6L – ₹7L | 20% | 20% | 20% | 5% | 5% |
| ₹7L – ₹7.5L | 20% | 20% | 20% | 10% | 5% |
| ₹7.5L – ₹9L | 20% | 20% | 20% | 10% | 10% |
| ₹9L – ₹10L | 20% | 20% | 20% | 10% | 10% |
| ₹10L – ₹12L | 30% | 30% | 30% | 15% | 10% |
| ₹12L – ₹15L | 30% | 30% | 30% | 20% | 15% |
| Above ₹15L | 30% | 30% | 30% | 30% | 30% |
Don’t be swayed solely by the seemingly lower rates of the New Tax Regime. Take the time to evaluate your potential savings under the Old Tax Regime by leveraging these powerful, often overlooked, deductions. A little planning can lead to significant tax savings, ensuring more money stays in your pocket.