Old Tax Regime: Why is the Old Tax Regime still better? These are 8 big reasons..

There are two tax regimes available for taxpayers, the New Tax Regime and the Old Tax Regime. Let us tell you that in the new system, the tax rates are low, but the deductions and exemptions are very low. On the other hand, in the old tax system, you get the benefit of a lot of tax exemptions and deductions, which can reduce your tax liability significantly.

In such a situation, tax experts believe that if you invest and spend wisely, then the old tax system can still be a better option for you. Let us know why the Old Tax Regime is better than the new tax regime.

Investment and tax savings together

The old system not only gives you an opportunity to save tax, but it also motivates you to invest regularly. You can take a deduction of up to 1.5 lakhs on PPF, ELSS, life insurance, tuition fees, etc. under 80C, that is, the more you put in savings, the less tax you will have to pay.

Big relief on health and life insurance
If you have taken health insurance, then a deduction is also available on its premium. You can get a deduction of up to Rs 25,000 for yourself and family and Rs 50,000 for parents (if a senior citizen). Also, relief is available on life insurance under 80C.

Investment in NPS will give an extra exemption.

In the old system, you can take an additional deduction of Rs 50,000 under 80CCD (1B) by investing in NPS (National Pension System). This exemption is available in addition to the limit of 80C, which further increases your tax savings.

Save thousands of rupees in tax through HRA and LTA.

If you live in a rented house and get HRA in your salary, then you can also take advantage of it. With the help of HRA, you can save a large part of your salary from tax. Also, if you are getting LTA (Leave Travel Allowance), then the money spent on touring India can also get tax exemption.

Home loan saves both the home and taxes.
If you have taken a home loan, then the old tax system provides relief on the interest deduction on it (up to Rs 2 lakh). This also makes the EMI cheaper and requires less tax. This facility is not available in the new tax system.

Relief on education, savings, and donations too
If you have taken an education loan, then you also get a deduction on its interest. Also, a rebate of up to Rs 10,000 on interest on savings account and up to Rs 50,000 for senior citizens is available. Tax exemption is also available on donating to an institution under 80G.

Better option for people with more deductions
If you are eligible for many deductions like 80C, 80D, 80CCD, HRA, home loan, etc., then your taxable income can be so low under the old tax system that you have to pay very little or no tax. This system is especially beneficial for the middle class and working people.

Tax savings will create a huge fund
Tax savings of a few thousand or lakhs of rupees every year can become a huge amount for you in the long run. The old tax system benefits those who invest with smart planning and long-term thinking.

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