Old Vs New Tax Regimes: Have A Home Loan? Check Which One Suits You Best

There are two tax regimes that are available for tax-payers to choose from and the two offer different sets of benefits. The old tax regime has more exemptions along with the standard deduction to offer. While the new tax regime offers only the standard deduction, which was increased to Rs 75,000 from Rs 50,000 in the Union Budget 2024–25.

Given the two have varied benefit systems, one can decide what is most tax efficient for them. For individuals with loans for assets like a house or a vehicle, there are deductions that can be claimed under the old tax regime.

Under Section 80C, the amount paid towards the principal of your home loan offers the benefit of tax deductions. The maximum housing loan tax exemption is Rs 1.5 lakh a year. One can avail these benefits if the evidence that the funds were used for the specific purpose can be given.

Further, if one takes a personal loan to renovate or repair their house, then they are eligible for a tax deduction under Section 24 of the Income Tax Act. One can claim deductions of up to Rs 30,000 per year on the interest paid on a personal loan.

If a loan is taken for the purchase or the construction of a house, one can claim a deduction of the interest paid on this loan. If the house is used for self-occupation, then there can be an interest deduction of up to Rs 2 lakh that can be availed.

In the last budget, the new tax regime had been revised and the standard deduction had been increased.

The revised slabs aimed to enable salaried employees to save up to Rs 17,500, according to the Finance Minister. Comparing the previous slab structure, the first two income brackets have been extended by a lakh and the brackets of the last two slabs remain unchanged.