The Union Budget 2025 introduced significant updates in India’s taxation system. While Finance Minister Nirmala Sitharaman did not announce new deductions or alter the Old Tax Regime, she focused on making the New Tax Regime more attractive by modifying tax slabs, rates, and rebates. This move aims to simplify taxation and encourage salaried individuals, especially non-government employees, to switch to the New Tax Regime.

Overview of Budget 2025 and Income Tax Changes

The government retained the Old Tax Regime with its wide range of deductions and exemptions. However, it made the New Tax Regime more appealing by restructuring tax slabs, offering lower tax rates, and raising rebates.

Under the Union Budget 2025, the Centre increased the rebate under Section 87A to ₹60,000, ensuring that income up to ₹12 lakh (₹12.75 lakh for salaried taxpayers) remains tax-free. In addition, the New Tax Regime now offers a standard deduction of ₹75,000.

Despite these reforms, many taxpayers who prefer maximising deductions through investments and expenses may still find the Old Tax Regime beneficial.

New Tax Regime 2025-26: Key Highlights

Finance Minister Nirmala Sitharaman emphasised simplification in the New Tax Regime. Below are the major updates for FY 2025-26:

• Increased rebate limit: Tax rebate under Section 87A raised to ₹60,000 for income up to ₹12 lakh.
• Standard deduction: A deduction of ₹75,000 available to salaried individuals and pensioners.
• Revised slabs and lower tax rates: Making compliance easier and reducing tax liability.

This restructuring encourages middle-class taxpayers to adopt the New Regime, as income up to ₹12 lakh is effectively tax-free.

Old Tax Regime 2025-26: Deductions and Exemptions

The Old Tax Regime continues to be attractive for taxpayers who use investment-linked deductions. It provides multiple opportunities to reduce taxable income.

Popular Deductions under the Old Tax Regime

• Section 80C: Up to ₹1.5 lakh deduction for investments in PPF, ELSS, LIC premiums, NSC, SCSS, housing loan principal repayment, and tuition fees.
• Section 80D: Deduction for health insurance premiums and preventive check-ups.
• Section 24(b): Deduction up to ₹2 lakh on interest paid on housing loans.
• HRA and LTA: Exemptions available for salaried employees.

Comprehensive List of Deductions under Old Tax Regime FY 2025-26

1. Section 24(b): Up to ₹2 lakh deduction on housing loan interest.
2. Section 80C: ₹1.5 lakh deduction for specified investments and payments.
3. Section 80CCC: Deduction for contributions to LIC annuity plans or other insurers.
4. Section 80CCD(1): Deduction for contributions to the Central Government Pension Scheme.
5. Section 80CCD(1B): Additional deduction up to ₹50,000 for NPS contributions.
6. Section 80CCD(2): Deduction for employer’s contribution to NPS.
7. Section 80CCH: Deduction for contributions to the Agnipath Scheme.
8. Section 80D: Deduction for health insurance premiums.
9. Section 80DD: Deduction for medical treatment or maintenance of disabled dependents.
10. Section 80DDB: Deduction for treatment of specified diseases.
11. Section 80E: Full deduction on interest paid for education loans.
12. Section 80EE: Additional ₹50,000 deduction on home loan interest sanctioned between April 2016 – March 2017.
13. Section 80EEA: Up to ₹1.5 lakh deduction for first-time homebuyers on loans sanctioned between April 2019 – March 2022.
14. Section 80EEB: Deduction up to ₹1.5 lakh on loans for electric vehicles sanctioned between April 2019 – March 2023.
15. Section 80G: Deduction for donations to charitable institutions and relief funds.
16. Section 80GG: Deduction for rent paid by individuals not receiving HRA.
17. Section 80GGA: Deduction for donations towards scientific research and rural development.
18. Section 80GGC: Deduction for contributions to political parties or electoral trusts.
19. Section 80TTA: Deduction up to ₹10,000 on savings account interest (non-senior citizens).
20. Section 80TTB: Deduction up to ₹50,000 on interest income for senior citizens.
21. Section 80U: Deduction for individuals with disabilities.

Which Tax Regime Should Non-Government Employees Choose?

Non-government employees must evaluate both regimes before filing taxes.

• Choose the New Regime if you prefer higher disposable income, simplified taxation, and minimal paperwork. It is ideal for individuals without significant investments.
• Choose the Old Regime if you actively invest in tax-saving instruments like PPF, ELSS, or NPS and claim exemptions like HRA and LTA.

By using Automatic Income Tax Preparation Software All-in-One in Excel for FY 2025-26, non-government employees can instantly compare both regimes. This tool prepares tax computation sheets, auto-calculates deductions, and generates reports, helping employees select the most beneficial regime.

Conclusion

Budget 2025 provides a clear choice between the New Tax Regime with higher rebates and simplified rules and the Old Tax Regime with comprehensive deductions and exemptions. Salaried individuals and pensioners benefit from the standard deduction of ₹75,000, while the rebate ensures tax-free income up to ₹12 lakh.

For non-government employees, the decision ultimately depends on their investment habits and financial goals. Leveraging Automatic Income Tax Preparation Software in Excel ensures accurate tax planning and maximises savings under the chosen regime.

Practical Example: Comparing Old vs New Tax Regime for FY 2025-26

To better understand the benefits, let us compare both tax regimes using a simple example.

• Case 1: Salaried Employee with Limited Investments
  Suppose Mr. A earns ₹12 lakh annually and has minimal investments. Under the New Tax Regime, his entire income up to ₹12 lakh becomes tax-free due to the increased rebate of ₹60,000 and the standard deduction of ₹75,000. This results in zero tax liability, making the New Tax Regime more favourable.
• Case 2: Salaried Employee with Heavy Investments
  Now consider Ms. B, who also earns ₹12 lakh annually but invests ₹1.5 lakh in PPF, pays ₹25,000 as health insurance premium, and pays interest of ₹2 lakh on a housing loan. Under the Old Tax Regime, she can claim all these deductions, significantly reducing her taxable income. For her, the Old Tax Regime proves more beneficial.

This example shows that the New Tax Regime suits individuals with fewer investments, while the Old Tax Regime remains valuable for those maximising deductions.

Role of Automatic Income Tax Preparation Software in Excel

Tax planning can feel overwhelming, especially with frequent updates in tax rules. Here is where Automatic Income Tax Preparation Software All-in-One in Excel plays a vital role.

Key Features of the Excel Tax Software

• All-in-One Solution: Prepares salary sheets, tax computation sheets, and Form 10E automatically.
• User-Friendly Interface: Even non-technical employees can enter details with ease.
• Dual-Regime Comparison: Instantly compares Old and New Tax Regimes to help select the best option.
• Updated for Budget 2025: Incorporates the latest slabs, deductions, and rebates.
• Error-Free Calculations: Eliminates manual mistakes, ensuring accurate tax filing.

For non-government employees, this software simplifies decision-making and guarantees compliance with the latest tax provisions.

Advantages of Choosing the Right Tax Regime

Selecting the correct tax regime directly impacts your financial planning, disposable income, and long-term savings. Here are some advantages:

1. Maximised Savings – Old Regime allows you to save more if you invest strategically.
2. Simplified Filing – New Regime reduces paperwork and compliance burdens.
3. Tailored Choices – Individuals can select the regime matching their lifestyle and financial goals.
4. Tax-Free Income Up to ₹12 Lakh – A significant relief for middle-class families under the New Regime.
5. Flexibility – Taxpayers can switch regimes every year while filing returns, based on benefits.

Tips for Tax Planning in FY 2025-26

• Assess Your Investments: Before filing, check how much you invest in tax-saving instruments.
• Use Technology: Employ Excel-based Automatic Tax Software to avoid miscalculations.
• Review Annual Expenses: Include eligible expenses like tuition fees, medical insurance, and home loan interest.
• Plan Ahead: Start your tax-saving investments early in the financial year to maximise benefits.
• Consult Professionals: If confused, seek advice from tax experts for better clarity.

Final Thoughts

The Union Budget 2025 brought a balanced approach by enhancing the New Tax Regime while preserving the Old Regime for traditional taxpayers. For non-government employees, the choice between the regimes depends on their investment behaviour, income structure, and financial goals.

By adopting Automatic Income Tax Preparation Software All-in-One in Excel, employees can easily compare regimes, claim eligible deductions, and ensure timely compliance. This not only saves money but also provides peace of mind during tax season.

In summary:

• The New Regime is ideal for those seeking simplicity and a higher disposable income.
• The Old Regime is better for individuals maximising deductions through investments.

Both systems now coexist, empowering taxpayers with flexibility, transparency, and control over their financial planning.

Download Automatic Income Tax Calculator All in One for Non-Government Employees in Excel for the F.Y. 2025-26

Features of this Excel Utility:

• This Excel Calculator prepares your Tax Computation Sheet instantly as per Budget 2025.
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• It generates your Salary Sheet automatically.
• It calculates H.R.A. Exemption U/s 10(13A automatically.
• It creates Form 16 Part A and Part B automatically.
• It prepares Income Tax Form 16 Part B automatically.
• It generates Income Tax Form 12BA automatically