New Tax Regime vs Old Regime: Which is Better for You in 2025?:

Suspense Crime,Digital Desk: New Tax Regime vs Old Regime: It’s a new financial year and you’re thinking of doing a tax plan makeover, so get set go. This is the time for investment declaration. But, are you in a dilemma whether to shift to the new regime or continue with the old tax regime? This initially appears advantageous, but the new tax regime does not permit claiming all possible tax deduction benefits. In such a circumstance, which regime will provide you the benefit, new or old? Benefits are in new tax regime if seen. Because, income less than Rs 12 lakh is completely tax free. Simultaneously even after all the deductions in the old, only up to 10 lakh can be made tax free. At the same time, another great benefit has been added in the New Tax Regime. One can claim tax exemption on the interest of home loan. No no, this exemption cannot be claimed straight away. There are rules for this. As you fulfill those guidelines, it becomes possible. Let’s get into the details.

Follow the rule to get discount on home loan interest.

The government has been operating the New Tax Regime (NTR) from the year 2020. In this, the tax slab was made easier in favour of many deductions and exemptions being removed. The bold question was if tax exemption would be provided on the interest on home loan in this new system or not? Well, it seems an answer has been found. Tax exemption can be claimed on home loan interest. But as is the case, the rule of let out property has to be followed. Every taxpayer will be benefitted from this opportunity but that's only if you understand new tax rules and exceptions.

New Tax Regime vs Old Regime: Difference in exemptions

Particular Old Regime New Regime

Standard Deduction ₹50,000 (salary) Now assumed to be 75,000 after 2023

Section 80C (Principal Repay) Eligible Not Allowed

Section 24(b) (Interests) Up to 2 lakh not applicable Only one exception made

Section 80EE/EEA (Extra Int.) Available Consolidated

Will there be a discount on home loan interest in new tax regime?

In short, No. You do not get interest deduction under Section 24(b). In the New Tax Regime, only interest-free standard deduction, NPS Employer contribution, and a few select allowances are granted. But there is one condition. If you happen to rent your house, then it changes the scenario. If the house on which you have taken a home loan is an Self Occupied Let-Out Property, then in the framework of House Property Income, the Negative Loss is countable.

Understand with an example.

Interest Paid = ₹3,00,000.

Rental Income = ₹1,00,000.

Net Loss = ₹2,00,000.

Meaning, that while deduction of home loan interest may not be claimed, can instead be indirectly accepted by set off.

What does the following mean?

If the house is self-occupied → no exemption

If the house is on rent (Let-Out) → loss can be set-off in rental income

If your expenditure is more than ₹2 lakh, then it will not be adjusted with your other income head (limit). The government has imposed a limit. You can do such “set-off” only up to ₹2 lakh in a year, even if your interest expenditure is ₹5 lakh.