Vikrant Shekhawat : Jan 14, 2025, 06:00 AM
Income Tax Department: If you are a taxpayer, you have to decide whether to choose the Old Tax Regime or the New Tax Regime. There are several significant differences between the two tax regimes, including tax exemptions and deductions. However, the old tax regime still remains attractive for many taxpayers. Let's know the 7 major reasons to choose the old tax regime.1. Tax Saving and InvestmentThe old tax regime encourages taxpayers to save and invest regularly. It offers the benefit of tax exemption on various investment options under Section 80C. These include PPF (Public Provident Fund), ELSS (Equity Linked Savings Scheme), and FD (Fixed Deposits). This regime helps you save for a financially secure future.2. Deduction on insurance premiumUnder the old tax regime, one also gets the benefit of tax deduction on life insurance and health insurance premiums. Under Section 80C, you can avail a deduction of up to Rs 1.5 lakh. Apart from this, tax exemption is also available on health insurance premium under Section 80D.3. Investment in NPSBy investing in the National Pension System (NPS), you can reduce your taxable income. Under the old tax regime, investing in NPS gives you the benefit of tax exemption under Section 80CCD(1) and 80CCD(1B). It is an excellent investment option for retirement, giving you financial security in the long term.4. Additional tax savings through NPSUnder Section 80CCD(1B), you get an additional tax exemption of up to Rs 50,000 in the old tax regime. This means that you can save additional tax by investing more than the limit of Rs 1.5 lakh in NPS. This exemption is very beneficial for those who want to reduce their tax liability further.5. Additional benefits on HRAIf your salary includes home rent allowance (HRA), you can avail it in the old tax regime. Under HRA, you can avail tax exemption on your rent expenses. People living in metro cities can claim exemption on HRA up to 50% of their salary. It is not even necessary to take a home loan to avail this exemption.6. Deduction on donationsUnder the old tax regime, donations to any institution or charity are eligible for tax exemption under Section 80G. This is useful for those who want to contribute to social work and also want to save tax.7. Interest on savings bank accountUnder Section 80TTA, deduction is also available on interest on savings bank account in the old tax regime. You can claim tax exemption on interest up to Rs 10,000. This is beneficial for those whose part of income comes from savings account.ConclusionThe Old Tax Regime is a better option for taxpayers who want to save tax as well as secure their financial future. It lets you make regular investments, take insurance, and avail various tax deductions. If you are looking for more deductions to save tax and focus on long-term savings, the Old Tax Regime may be beneficial for you.