📚 Introduction
Choosing between the old tax regime (with full Chapter VI-A deductions) and the new regime (reduced rates but fewer deductions) can make or break your tax savings. This guide will:
- 🔍 Outline key differences between regimes
- 📑 List eligible deductions under each
- ⚖️ Provide comparative tables and examples
- 💡 Offer a decision framework and FAQs
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| Old vs. New Tax Regime – Chapter VI-A Deductions Overview |
🔑 Key Differences: Old vs. New Regime
| Feature | Old Regime | New Regime (Sec 115BAC) |
|---|---|---|
| Tax Slabs | 0–30% | 0–25% (revised slabs) |
| Standard Deduction | ₹50,000 | ₹50,000 |
| Chapter VI-A Deductions | Full list (80C–80U) | Only a few (80CCD(2), 80JJAA, 80CCH) |
| HRA, LTA, Professional Tax | Allowed | Not allowed |
| Complexity | Higher (multiple proofs) | Simpler (fewer inputs) |
| Ideal for | Claiming heavy deductions/investors | Young taxpayers, low-deductions profile |
🗂️ Deductions Available Under Each Regime
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| Chapter VI-A Deduction Matrix by Regime |
✅ Old Regime (Full Deductions)
- 80C to 80U (all sub-sections covered in Articles 1–8)
- HRA, LTA, professional tax, standard deduction, home loan interest (Sec 24)
⚠ New Regime (Limited Deductions)
- 80CCD(2): Employer NPS contribution
- 80JJAA: New employment incentives
- 80CCH: Agniveer fund contributions
- Standard deduction: ₹50,000
📊 Comparative Table: Deduction Summary
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| Decision Flowchart – Should You Opt for the Old or New Regime? |
| Section | Purpose | Old Regime | New Regime |
|---|---|---|---|
| 80C–80U | Investment, health, loans | ✅ | ❌ |
| 24(b) | Home loan interest | ✅ | ❌ |
| HRA/LTA | Allowances | ✅ | ❌ |
| 80CCD(2) | Employer NPS | ✅ | ✅ |
| 80JJAA | New jobs | ✅ | ✅ |
| 80CCH | Agniveer fund | ✅ | ✅ |
🎯 Decision Framework
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| Checklist: Which Deductions Are Allowed in the New Regime? |
- Estimate taxable income under both regimes using your data.
- List deductions you regularly claim under old regime.
- Calculate tax liability in each scenario using an online calculator.
- Compare cash flows, including liquidity needs and ease of compliance.
- Choose the regime with lower tax and acceptable paperwork.
🔍 Example Scenarios
Case A: Salaried professional with ₹1.5 L in 80C + ₹50k in 80CCD(1B) + 80D + HRA → likely better off in old regime.
Case B: Young single professional with no investments and only standard deduction → new regime may yield lower tax and simpler filing.
❓ FAQs
- Can I switch regimes mid‑year?
- No. Choice made while filing ITR cannot be changed later for that year.
Which form to use for new regime?
- File Form 10IEA (for salaried/business) before ITR to declare switch.
Is standard deduction allowed in both?
- Yes, ₹50,000 standard deduction applies to both regimes.
Do allowances like HRA count in new regime?
- No. All allowances are taxable; only standard deduction applies.
How often to reconsider regime choice?
- Annually, during year-end planning (Jan–Mar).
Where to find Form 10IEA utility?
- On the Income Tax E-filing portal under downloads.
🖨️ Downloadable Comparison Sheet (PDF)
Coming up in next post to help you weigh both regimes at a glance.
Stay tuned for Article 11, our bonus guide on deductions beyond Chapter VI-A!