Filing your Income Tax Return for the financial year 2024–25 requires a careful decision between the old tax regime and the new tax regime. Understanding the difference in deductions available under each regime is crucial because it directly impacts how much of your income is considered taxable and how much tax you ultimately pay. The deadline to submit your Income Tax Return (ITR) for this financial year is September 15, and as this date gets closer, it becomes even more important for taxpayers to evaluate the deductions they can rightfully claim. The choice of regime—old or new—plays a central role, as it determines the set of benefits available to you. The new tax regime has simplified tax rates and structures, but it restricts the number of deductions. On the other hand, the old regime provides a much broader list of deductions through various investments, insurance payments, loans, and charitable donations.
Under the new tax regime, deductions are limited but not completely absent. Taxpayers can still claim certain specific benefits, such as deductions on the interest paid on a housing loan under the category of income from house property. Contributions made by an employer towards the central government pension scheme also qualify for deduction under Section 80CCD(2). In addition, individuals who contribute to the Agnipath Scheme can claim deductions under Section 80CCH. Although the list is short compared to the old regime, these provisions still provide some opportunities for tax reduction.
The old tax regime, however, remains more comprehensive when it comes to deductions and tax-saving opportunities. For example, Section 24(b) allows taxpayers to claim deductions on the interest paid on home loans or home improvement loans. Section 80C permits individuals to claim up to Rs. 1.5 lakh on investments in provident funds, public provident funds, life insurance policies, and equity-linked savings schemes. Sections 80CCC and 80CCD(1) cover contributions towards pension schemes, while Section 80CCD(2) provides further deductions for employer contributions. Other useful provisions include deductions under Section 80CCH for contributions to the Agnipath Scheme, Section 80D for health insurance and preventive check-ups, Section 80DD for medical expenses related to disabled dependents, and Section 80DDB for treatment of specific diseases.
Students and families can also benefit from deductions under Section 80E, which provides relief on education loan interest. First-time homebuyers are eligible for benefits under Sections 80EE and 80EEA, while individuals who purchase electric vehicles can claim deductions under Section 80EEB. Donations are also incentivized, with Section 80G covering contributions to charitable organizations, Section 80GGA extending benefits for rural development and scientific research, and Section 80GGC providing relief for contributions made to political parties. Taxpayers paying rent but not receiving house rent allowance (HRA) can claim deductions under Section 80GG. In addition, senior citizens are granted deductions on their interest income under Section 80TTA, and individuals living with disabilities can claim deductions under Section 80U.
When it comes to choosing between the two regimes, taxpayers must make a thoughtful comparison. The new tax regime is more straightforward and is particularly suitable for individuals who do not have many investments or expenses that qualify for deductions. In contrast, the old regime remains beneficial for those who actively invest in tax-saving schemes, hold insurance policies, repay loans, or make regular donations. With the September 15 deadline approaching, reviewing and calculating your eligible deductions before filing your return can significantly reduce your overall tax liability and help you make a well-informed financial decision.
