New Tax Regime vs Old Tax Regime slabs and rates after Budget 2025: Check comparison

"To tax payers upto ₹12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them," she said.

In the lead-up to the Union Budget 2025, expectations raised by tax experts and media reports brought the focus back on the debate over old versus new tax regimes.

It was expected that the finance minister would make the new tax regime more lucrative for taxpayers. During the last Union Budget announced in July 2024, Finance Minister Nirmala Sitharaman made some changes to the new tax regime but kept the old regime unchanged.

The new tax regime was introduced in FY 2020-21. Taxpayers can choose between the old and new tax regimes. However, the new tax regime has become the default regime from FY 2023-24.

Under the new tax regime, salaried individuals can opt for deductions on the employer’s contribution to their National Pension System (NPS) and Employee Provident Fund (EPF) accounts. Apart from these, there are only a limited number of deductions available under the new regime.

The old tax regime, on the other hand, allows several tax deductions and exemptions. However, the tax rates remain high compared to the new tax regime.