The new tax regime introduced in India focuses on lower tax rates and a simpler filing process. However, it eliminates most exemptions available under the old regime. Here's a clear status of some important exemptions and non-exemptions under this new regime:
Income from Life Insurance (Not Exempt): Maturity proceeds from most life insurance policies are taxable under the new regime. Certain exceptions exist for policies like term insurance or those where premiums do not exceed 10% of the sum assured.
Agricultural Income (Exempt): Income from agriculture is totally exempted from tax.
Standard Deduction on Rent (HRA) (Not Exempt - Replaced by Standard Deduction): New tax regime doesn’t provide house rent allowance instead of this they provide  standard deduction.
Retrenchment Compensation and Leave Encashment on Retirement (Not Exempt): New regime charge tax on leave encashment and payment received as compensation for retrenchment
VRS Proceeds up to ₹5 lakhs (Not Exempt): Voluntary Retirement Scheme are taxable under new tax regime.There may be partial exemption for a specific amount depending on the VRS terms.
Death cum Retirement Benefit (Not Exempt): Benefits received under schemes combining death and retirement benefits are generally taxable under the new regime, with possible exceptions based on employer-specific terms.
Scholarship for Education, etc. (Exempt): Scholarships provided by government, university, or approved institutions for full-time education remain exempt from tax under the new regime.

Understand Old Tax Regime

The old tax regime, also referred to as the regular regime, follows a traditional approach to tax filing in India. It involves a more detailed process compared to the new regime but offers potential benefits for certain taxpayers because of the numerous deductions and exemptions available.
The old tax regime features a progressive tax structure with multiple tax brackets, unlike the simplified structure of the new regime. Tax rates increase progressively as income levels rise, ensuring higher earners contribute proportionately more. Below are the tax rates for FY 2024-25 (AY 2025-26):

Under the old tax regime, taxpayers can claim various deductions to reduce their taxable income. Here are some popular deductions:

1. Section 80C: Allows deductions for investments up to ₹1.5 lakh in a financial year in instruments such as Public Provident Fund (PPF), Employee Provident Fund (EPF), Unit Linked Insurance Plans (ULIPs), etc.
2. House Rent Allowance (HRA): Individuals with salary can claim deduction for rent paid subject to specified limits.
3. Leave Travel Allowance (LTA):Old tax regime allows individuals to deduct travel expenses for themselves and their families for specified journeys.

4. Section 80D:This section allows individuals to deduct medical insurance for themselves,spouse etc.

   These deductions help in reducing the taxable income, thereby potentially lowering the overall tax liability under the old tax rate.

Tax Management Strategies in the Old Tax Regime

Old tax regime is challenging for some taxpayers because in this regime their is higher tax rates as compared to new tax regime Old tax regime offers many ways to reduce taxable amount.This regime provide 70 ways to lower their taxable income..Exemptions such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA) are integral components of many individuals' salaries and serve as prime examples. On the other hand, deductions allow taxpayers to reduce their tax burden through investments, savings, or specific expenditures.For instance, Section 80C allows a deduction of taxable income by up to ₹1.5 lakhs. In addition, opportunities for tax savings arise when engaging in activities such as taking out a home loan or purchasing health insurance for oneself, family members, and parents.

Income Tax Old Regime vs New Regime : An Example

Let us consider Rahul, a salaried individual, with the following details for the financial year 2023-24: Salary: ₹10 lakh Investments (deductible under Section 80C): ₹1.5 lakhs (PPF, Equity Linked Savings Scheme) House Rent Allowance (HRA): ₹2 lakhs Medical Insurance Premium (deductible under Section 80D): ₹50,000 for self and parents We will calculate his tax liability under the old and new regimes to see which one is more suitable for him.

Which one is better : Old vs New Tax Regime

Feeling overwhelmed by tax filing complexity? The new tax regime might offer a simpler solution! It features streamlined processes and potentially lower tax rates. However, there's a trade-off—you won't benefit from most deductions and exemptions.Conversely, the old regime allows you to claim these benefits, which could further reduce your tax burden. Yet, it involves more paperwork. If you have few deductions, less than ₹1.5 lakhs annually, and prefer a straightforward experience, the new regime could be ideal.On the other hand, if you qualify for significant deductions and don't mind the additional paperwork, sticking with the old regime might save you more money in taxes. Ultimately, the best choice depends on your income level and financial goals. Consider consulting a tax advisor for personalized advice.

Conclusion

In conclusion, choosing between India's old and new tax regimes comes down to balancing simplicity and potential tax savings. The new regime features reduced tax rates and a simpler process but excludes many deductions and exemptions. On the other hand, the old regime offers numerous avenues for tax savings through deductions and exemptions, despite requiring more paperwork. Individuals with fewer deductions might prefer the straightforward approach of the new regime, while those with substantial deductions could save more with the old regime. Seeking advice from a tax advisor can offer personalised guidance based on individual financial situations.

Also Read :Central Board Of Direct Tax[CBDT]