Old vs. New Tax Regime: Find Out Which Option Offers Greater Savings Before Filing Your ITR..

The New Tax Regime is rapidly gaining popularity due to its lower tax rates and simplified procedures. In particular, salaried individuals earning up to ₹12.75 lakh, and those with other sources of income earning up to ₹12 lakh, are able to avail the benefit of zero tax liability. This is the reason why a large number of taxpayers are opting for this choice without much deliberation.

**But the Decision Isn't That Simple**
However, experts believe that making a decision based solely on lower tax rates is not prudent. The various exemptions and deductions available under the Old Tax Regime play a crucial role in saving taxes. In the New Regime, most of these exemptions have been removed, which, in many instances, could actually lead to an increase in the overall tax burden.

**Key Features of the Old System**
The Old Tax Regime offers several benefits, including House Rent Allowance (HRA), children's education allowance, Leave Travel Concession (LTC), transport allowance, and various others. If utilized effectively, these provisions can significantly reduce one's taxable income. This option remains particularly advantageous for individuals who invest their money in various investment avenues and tax-saving schemes.

**Some Benefits Are Common to Both Regimes**
There are certain tax benefits that are available under both tax systems. For instance, a tax exemption of up to ₹200 per meal is now provided on food coupons (meal vouchers)—an increase from the previous limit of ₹50. Additionally, there is a fixed rule regarding the taxation of car perquisites (company-provided car facilities), ensuring that no tax is levied on any additional allowances associated with it. Gifts and vouchers valued up to ₹15,000 also remain tax-free under both tax regimes.

**ITR Filing Deadline**
The deadline for filing Income Tax Returns (ITR) for the Financial Year 2026–27 (Assessment Year 2027–28) has been set for July 31, 2027. Conversely, the deadline for the Assessment Year 2026–27 is July 31, 2026, and the new rules will not be applicable to that specific assessment year. Benefits Depend on Making the Right Choice
Experts suggest that taxpayers should compare both tax regimes based on their income, expenses, and investment habits. While the new regime is simpler, the old regime offers the opportunity for greater savings with proper planning. Therefore, choosing the right option while filing an ITR is crucial.

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