Will Budget 2025 scrap the old, with-exemptions tax regime?

With the Central government making the new and minimal exemptions regime more appealing to taxpayers over the years, many have shifted away from the old regime that provided several exemptions over the years. According to finance ministry data, 72 percent of taxpayers switched to the new tax regime in financial year 2023-24.

Budget 2024 sweetened the deal further in July 2024, when Union finance minister Nirmala Sitharaman rejigged the income tax slabs under the new, minimal exemptions tax regime and increased the standard deduction from Rs 50,000 to Rs 75,000. She also hiked the tax break on employers’ contribution to employees’ National Pension System (NPS) from 10 percent to 14 percent

In contrast, the tax slabs, rates and standard deduction under the old tax regime were left unchanged.

Was it a prelude to phasing out the old regime?

Unlikely, feel experts. “I do not believe the government will scrap the old tax regime in Budget 2025. For most tax-payers, the new regime will result in lower tax outgo, especially post Budget changes in July 2024. However, a section of tax-payers might still find the old structure to be more beneficial. The government will not tinker with the old regime keeping such tax-payers’ interests in mind,” says Karan Batra, founder of tax consultancy firm Chartered Club.