Considering your city usage and no mention of any preference for body style between the two, we would suggest going for the Maruti Suzuki Baleno as compared to the Dzire. Both cars are spacious and have a comfortable ride quality and are similar in terms of interior quality. 

But the Baleno has two key advantages. The boot space is more usable thanks to it being a hatchbcak and you can also fold the rear seat for added luggage space, which makes it more practical when you need to carry long items or want extra luggage space. 

The Baleno also uses the older 1.2 litre dual jet four cylinder engine, which is smoother and more powerful than the new 1.2 litre three cylinder engine on the Dzire. If you are looking for an automatic, the AMT gearbox also works better on the Baleno.

As an alternative, you could also consider getting the Maruti Suzuki Fronx. It is slightly more expensive but gives you a more SUV-like stance with better ground clearance and added road presence, while still being easy to drive in the city.

The Honda Amaze ZX CVT is the one we'd recommend for you. It's got the smoother gearbox, which has a big bearing on your overall highway experience. Further, the Amaze also feels more confident at highway speeds. The Amaze doesn't stand out for tech features, but it packs in all the essentials (touchscreen, Android Auto/Apple CarPlay, cruise control, and auto climate control) and more to ensure a comfortable drive. 

A key differentiator on the Amaze is ADAS, which adds a layer of protection, especially on highway drives. Also, Honda's CVT is reliable. In general, the Amaze is a hassle-free car. 

Where the Amaze trails the Maruti Baleno is in fuel economy. The Baleno's AMT ekes out a better real-world economy than the Amaze's CVT. Even so, as a package, the Amaze is the one for you.  

The Maruti Suzuki Baleno AMT Alpha is the best pick for your needs. Like other Marutis, the Baleno offers a hassle-free ownership experience with easy service availability and relatively low maintenance costs. 

The AMT gearbox works well in average city driving conditions, delivering smooth enough gearshifts. A highlight of the Baleno is fuel economy, and ride comfort is also very good at city speeds, making it the right pick for you.  
 

It's hard to guide you to the ideal car without knowing more of your requirements. However, we have trimmed the list of options down to a few cars that excel in certain aspects. 

Maruti Suzuki Wagon R 1.2 AMT - The Wagon R scores for ease of use. The high seating, large glass area and light controls put drivers at immediate ease. Superb cabin space for this size of car. 

Maruti Suzuki Baleno Delta MT -  A smooth engine and great ride comfort are highlights of the Baleno. Delta trim packs in a reasonable number of feel-good features.

Maruti Suzuki Dzire MT VXI - Sedan shape has its charm. Smooth engine and comfortable ride make it a good choice. 

Tata Punch Pure Plus S MT - Tough feel and absorbent suspension make it feel like a junior SUV. Not as spacious as other options.

Hyundai Exter S Plus Pro Pack - Easy to drive and comfortable for city use. 

Nissan Magnite N Connecta/ Renault Kiger Techno MT - Visually, the largest and offers the most space too. Decent features for the money. The engine is weak, however.    


 

While your annual pay package is only one part, several other factors could influence your vehicle budget - existing loans, monthly fixed expenses, savings, etc. Without knowing which, it would be difficult to give you a definitive reply. Still, we'd advise you to keep your maximum monthly outflow towards your vehicle EMI limited to 20-25% (approximately 11,000-12,000) of your net monthly income. This would mean your loan amount must not exceed approximately Rs 5.50 lakh over a period of 5 years. 

Since you're open to used cars, we'd advise you to consider the newest possible car you can get for the money. Look for something fuel-efficient, easy to maintain, and with a good reputation for reliability. A hatchback will be the most convenient in the city. 

Some used examples you could consider are the Maruti Baleno CVT and Honda Jazz CVT. Also, while buying a used car, ensure you buy your car from a trusted source such as Spinny, which also provides a warranty, for added peace of mind.

If you are buying a new car, the recently updated Tata Punch would be a good choice. With its taller height and wide opening doors, entry and exit are very easy. The elevated seating position also gives you a good view outside, and that, along with the car's compact size, makes it quite easy to drive.

If you are looking to buy a used car, you can check out a Maruti Baleno. The car sits lower than the Punch, but it's also easy to drive with light controls and look for pre-2022 cars with the CVT gearbox. It is much smoother than an AMT autobox, which the Punch and Baleno now come with. When buying a used car, purchase it from a reputable reseller like Spinny.     

Since you currently have a Maruti Suzuki Baleno, we would suggest you upgrade to something like the Honda Amaze or the Skoda Kylaq. Both cars come in under 4 meters in length and so are better suited to crowded city conditions.  

The Amaze's CVT automatic gearbox is smoother than many AMTs that come at this price point. Especially when driven at low, constantly changing speeds in the city and being a sedan. It will feel like an upgrade and offer you more boot space, too, should that be a requirement for you. 

If you don't like the idea of a sedan, you can opt for the Skoda Kylaq, which will offer you a higher seating point and better ground clearance. Also, the automatic gearbox on the Kylaq is a torque convertor, which is the smoothest autobox around.