Question 1

What are the main changes in the New Tax Regime under Budget 2025?

Accepted Answer

The Union Budget 2025 introduced major relief: 1) The basic exemption limit was increased to ₹4 Lakh (up from ₹3 Lakh). 2) The tax slabs were widened: 5% up to 8L, 10% up to 12L, etc. 3) The Section 87A tax rebate was increased to ₹60,000, which means individuals with taxable income up to ₹12 Lakh pay zero tax under the New Regime.

Question 2

What is the Standard Deduction for FY 2025-26?

Accepted Answer

For salaried individuals and pensioners, the standard deduction is ₹75,000 under the New Tax Regime (increased from ₹50,000), and ₹50,000 under the Old Tax Regime.

Question 3

Which regime is better for me, Old or New?

Accepted Answer

It depends entirely on your investments and deductions. If you claim significant deductions like HRA exemption, Home Loan Interest (Section 24B), and Section 80C investments, the Old Regime might be better. However, for individuals with fewer investments or CTC up to ₹12.75 Lakh (with standard deduction), the New Regime is overwhelmingly more beneficial and tax-free.

Question 4

What is Section 87A rebate and how does it differ between regimes?

Accepted Answer

Under the Old Regime, the 87A rebate is up to ₹12,500 for taxable income up to ₹5 Lakh. Under the New Regime (FY 2025-26), the 87A rebate is up to ₹60,000 for taxable income up to ₹12 Lakh, resulting in zero tax up to ₹12 Lakh.

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