Old vs New Tax Regime

The core trade-off in one sentence

The new regime gives you a bigger standard deduction (Rs 75,000 vs Rs 50,000), a much more generous Section 87A rebate threshold (Rs 12,00,000 taxable income vs Rs 5,00,000), and lower rates on most slabs, but it does not let you claim 80C investments, 80D health insurance, home loan interest, HRA exemption, or most other deductions. The old regime charges more on paper, but every rupee of eligible deduction you can genuinely document reduces your taxable income further, which is why it can still win for taxpayers with substantial deductions. For the full slab-by-slab breakdown of either regime on its own, see the income tax calculator.

Side-by-side slab comparison

On a slab-by-slab basis the new regime is cheaper or equal at every single income level. The only way the old regime ends up cheaper overall is by reducing your taxable income far enough, through deductions, that you are comparing a much smaller old-regime taxable figure against a larger new-regime one.

Standard deduction and Section 87A rebate, compared

This is the single biggest reason the new regime suits most salaried taxpayers: its zero-tax ceiling is more than double the old regime's, before you have claimed a single deduction. Under the old regime, reaching that same zero-tax outcome at a Rs 12,75,000 salary would require roughly Rs 7,25,000 of combined deductions, far beyond what most taxpayers can realistically document.

Worked example: Rs 15,00,000 salary at different deduction levels

At a Rs 15,00,000 gross salary, the new regime with no deductions comes to Rs 97,500 total tax and cess. The table below shows what the old regime costs at increasing deduction levels, all for the same Rs 15,00,000 salary.

At this income level, the crossover sits somewhere between roughly Rs 5,00,000 and Rs 5,50,000 of combined old-regime deductions: a taxpayer would typically need a sizeable home loan interest claim on top of a full Section 80C investment and health insurance premiums to reach that level. The exact crossover point moves as income changes, which is exactly why a single rule of thumb cannot substitute for entering your own figures.

Deductions the new regime does not allow

These are commonly claimed under the old regime but have no equivalent in the new regime, aside from the employer's NPS contribution under Section 80CCD(2), which both regimes still allow:

• Section 80C: up to Rs 1,50,000 for PPF, ELSS mutual funds, life insurance premiums, principal repayment on a home loan, and similar
• Section 80D: health insurance premiums for yourself and family
• HRA exemption: for salaried employees who pay rent
• Home loan interest under Section 24(b): up to Rs 2,00,000 for a self-occupied property, uncapped for a let-out property
• Section 80E: interest on an education loan
• Leave Travel Allowance (LTA) exemption

A practical way to decide

Add up every deduction you can genuinely document for the year: your actual 80C investments, actual health insurance premiums, actual home loan interest paid, and your actual HRA exemption if applicable. Enter your gross salary and that combined total into the calculator above with the old regime selected, then switch to the new regime with the same salary and no deductions. Whichever total tax figure is lower is the regime that saves you more money this year. Because both your salary and your deductions can change year to year, particularly once a home loan's interest component declines over its tenure, it is worth re-running this comparison annually rather than assuming last year's answer still holds. If you only have a CTC figure rather than your exact gross salary, the in-hand salary calculator works out the gross figure first.