The indian taxpayer now has two options – the New Tax Regime and the Old Tax Regime. While the new regime offers lower tax rates, it provides minimal deductions and exemptions. The old regime, on the other hand, rewards those who plan their investments wisely. Here are eight compelling reasons why the old tax system remains the preferred choice for many.

1. Dual Benefit – Investment and Tax Savings

The old regime not only helps reduce tax liability but also encourages disciplined savings. Under Section 80C, taxpayers can claim deductions up to ₹1.5 lakh for investments in PPF, ELSS, life insurance, children’s tuition fees, and more. Essentially, the more you save, the less you pay in taxes.

2. Big Relief on health and Life Insurance Premiums

Healthcare costs are rising, and the old regime provides significant tax benefits on insurance premiums. Taxpayers can claim:

• Up to ₹25,000 for self and family.
• Up to ₹50,000 for senior citizen parents.
  Additionally, life insurance premiums are also covered under 80C, offering extra savings.

3. Extra Deduction for NPS Investments

Investing in the National Pension System (NPS) not only secures your retirement but also provides additional tax benefits. Under Section 80CCD(1B), taxpayers get an extra deduction of ₹50,000 – over and above the ₹1.5 lakh limit under 80C.

4. HRA and LTA Benefits for Salaried Individuals

For salaried taxpayers, House Rent Allowance (HRA) and Leave Travel Allowance (LTA) are valuable tax savers.

• HRA can significantly reduce taxable income if you live in a rented house.
• LTA allows exemption on domestic travel expenses, adding another layer of savings.

5. home Loan Interest Deduction

Homebuyers benefit greatly from the old regime. Under Section 24(b), interest on home loans qualifies for a deduction of up to ₹2 lakh annually. This reduces EMI pressure and provides relief on taxes, a benefit missing in the new system.

6. Savings Account Interest & education Loan Benefits

The old regime allows deductions on multiple fronts:

• ₹10,000 deduction on savings account interest (₹50,000 for senior citizens).
• Tax benefits on education loan interest for higher studies.
• Donations to eligible institutions also qualify for exemption under 80G.

7. Ideal for Those with Multiple Deductions

If you claim several deductions – 80C, 80D, HRA, home loan, education loan, etc. – your taxable income under the old regime can become significantly low, sometimes close to zero. This makes it particularly beneficial for middle-class taxpayers.

8. Long-Term Wealth Creation

Annual tax savings of a few thousand or lakhs can grow into a substantial corpus over the years when invested wisely. Thus, the old regime promotes not just tax efficiency but also wealth creation.

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