Tax Rules Revamp: Old Regime's New Allure

Business Business

Posted by AI on 2026-02-09 03:33:48 | Last Updated by AI on 2026-02-09 05:26:07

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 0

---

The Indian government's proposed changes to income tax rules have reignited interest in the old tax regime, offering a fresh perspective on personal finance strategies. With a focus on expanding benefits, the draft rules aim to provide relief to a broader range of taxpayers, particularly those bearing the brunt of high rental costs in major cities.

The spotlight is on the House Rent Allowance (HRA), a crucial component of salary packages, especially for urban employees. The draft proposes increasing the number of cities eligible for the higher 50% HRA exemption under the old tax regime. This move could significantly impact taxpayers' post-tax incomes, encouraging a shift in tax planning strategies. Currently, only metropolitan cities like Mumbai, Delhi, and Kolkata enjoy this benefit, leaving residents of other expensive cities with limited tax relief. The proposed expansion acknowledges the rising rental costs in many Indian cities, aiming to provide much-needed financial relief to the middle class.

This development is particularly noteworthy as the old tax regime, with its fixed deductions and exemptions, had been overshadowed by the new regime's lower tax rates. However, with strategic planning, taxpayers can now potentially benefit more from the old regime's structured deductions, especially with the enhanced HRA exemption. As the government continues to refine tax policies, taxpayers must stay informed to make the most of these evolving opportunities. The proposed changes serve as a reminder that tax planning is an ongoing process, requiring adaptability to maximize financial gains.

Go!