Even today, the Old Tax Regime remains the preferred choice for millions of taxpayers, offering these benefits - complete details..

Whenever the topic of income tax comes up, the question on most people's minds is how to pay less tax. In recent years, a new tax regime has emerged, but despite this, millions of people in the country are still opting for the Old Tax Regime. The biggest reason for this is the various exemptions and deductions available under this system, which can significantly reduce the tax burden.

What is the Old Tax Regime, and why is it special?
The Old Tax Regime is the traditional income tax system in which the government provides tax relief for investments and necessary expenses. Its purpose is not only to collect taxes but also to encourage people to save, invest in insurance, and plan for their future. This is why this system remains popular among salaried employees and middle-class taxpayers.

What are the tax slabs under the Old Tax Regime?

Under the old tax system, annual income up to Rs. 2.5 lakh is completely tax-free. After that, the tax rates vary depending on the income level. Income between Rs. 2.5 lakh and Rs. 5 lakh are taxed at 5 percent. Income between Rs. 5 lakh and Rs. 10 lakh is taxed at 20 percent, and for those earning more than Rs. 10 lakh, the tax rate is 30 percent.

Deductions that make the Old Tax Regime beneficial
The real strength of this system lies in the tax exemptions it offers. First, let's talk about Section 80C, under which you can get a deduction of up to Rs. 1.5 lakh on investments and expenses such as PPF, LIC, EPF, ELSS, and children's tuition fees. In addition, there is separate tax relief on health insurance, which also lightens the burden of medical expenses.

Old Tax Regime: Complete Checklist for Saving Taxes
Deduction | What is the exemption for? Tax Saving Limits
80C PPF, EPF, ELSS, LIC, etc. Up to ₹1.5 lakh annually
80D Health Insurance Premium ₹25,000 (Senior Citizens: ₹50,000)
80E Interest on Education Loan No limit, maximum 8 years
80DDB Treatment of Serious Illness, as per limits set by the government
80GG Rent (when HRA is not received) ₹5,000/month or 25% of income (whichever is less)
80TTA / 80TTB Interest on Savings Account ₹10,000 / Senior Citizens: ₹50,000
80U Relief for Disabled Taxpayers ₹75,000 / Severe Disability: ₹1.25 lakh
HRA (10(13A)) For those living in rented accommodation Depends on salary + rent structure
LTA Travel Expenses Twice in 4 years

Standard deduction is another major relief for salaried individuals, where a fixed amount is directly deducted from the salary. If you live in rented accommodation, you can save a good amount on taxes through the House Rent Allowance. Those who have taken a loan to buy a house also get a separate tax exemption on home loan interest, which reduces the burden of EMIs to some extent.

What are the major advantages of the Old Tax Regime?
The biggest advantage of this tax system is that it helps people cultivate the habit of saving. When you invest to save on taxes, you are actually securing your future. Besides, this system proves to be quite beneficial for people who have regular expenses like home loans, health insurance, or children's education.

If you can show deductions of up to ₹4 to 5 lakh with proper planning, your taxable income will be significantly reduced. This directly means that your total tax liability will also decrease, which is what every taxpayer wants.

For whom is the Old Tax Regime better? If you make full investments under Section 80C every year, have health insurance, and are paying home loan EMIs, the old tax regime might be more beneficial for you. This system is still considered a sensible option, especially for middle-class families where both expenses and investments are significant.

How to make the right choice?
Every individual's income and expenses are different, so no single tax system can be considered the best for everyone. The best approach is to compare both tax regimes, taking into account your annual income, investments, and expenses. This will give you a clear understanding of which option is more helpful in saving taxes for you.

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