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Income Tax Calculator: Old vs New Regime

Compare your income tax under the old and new tax regimes and find which option saves you more.

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Tax slabs in the old tax regime differ according to age classifications.

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All you need to know about Old vs New Tax Regime Calculator

TABLE OF CONTENT

Old vs new tax regime: What's the differenceIncome tax slabs under the old vs new tax regimes (FY 2024-25 to FY 2026-27)How income tax differs by income groupHow to choose between the old vs new tax regimeWhat deductions and exemptions are allowed in the new tax regime?Are taxpayers allowed to switch between different tax regimes?Objectives of the new tax regimeBenefits of the new tax regimeCapital gains under the old and new regimesSet-off and carry-forward rules: Old vs new regimeFAQs
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Old vs new tax regime: What's the difference

India's income tax system has offered two parallel tax regimes since FY 2020-21.

Old tax regime: Higher slab rates, but reduces taxable income through deductions under Sections 80C (now Section 123) (up to ₹1.5 lakh in investments like EPF, PPF, ELSS, life insurance), 80D (now Section 126) (health insurance), 24(b) (now Section 22) (home loan interest), HRA, and LTA. Best for taxpayers with significant eligible deductions.

New tax regime: Lower slab rates with a Section 87A (now Section 156) rebate covering total income up to ₹12 lakh (FY 2025-26 and Tax year 2026-27), but allows almost no deductions except the employer's contribution to NPS under Section 80CCD(2) (now Section 124(1). Best for taxpayers with few deductions or income up to ₹12 lakh.

Income tax slabs under the old vs new tax regimes (FY 2024-25 to FY Tax year 2026-27)

Both regimes have their own benefits and drawbacks. The old regime rewards taxpayers who invest in deduction-eligible instruments. The new regime simplifies tax filing with lower slabs and minimal deductions, benefiting those with simpler finances or income up to ₹12 lakh.

Old tax regime slabs (FY 2024-25, 2025-26, and Tax year 2026-27)

The old regime uses a multi-slab structure with rates based on age. These slabs are unchanged for FY 2024-25, 2025-26, and Tax year 2026-27.

For age up to 59 years

Income Tax SlabIncome Tax Rate
₹0 – ₹2.5 lakhNil
₹2.5 lakh – ₹5 lakh5%
₹5 lakh – ₹10 lakh20%
Above ₹10 lakh30%

For age between 60–79 years

Income Tax SlabIncome Tax Rate
₹0 – ₹3 lakhNil
₹3 lakh – ₹5 lakh5%
₹5 lakh – ₹10 lakh20%
Above ₹10 lakh30%

For age 80 and above

Income Tax SlabIncome Tax Rate
₹0 – ₹5 lakhNil
₹5 lakh – ₹10 lakh20%
Above ₹10 lakh30%

Surcharge under the old regime applies when taxable income exceeds ₹50 lakh:

Taxable IncomeSurcharge Rate
₹50 lakh – ₹1 crore10%
₹1 crore – ₹2 crore15%
₹2 crore – ₹5 crore25%
Above ₹5 crore37%

For example, on a taxable income of ₹60 lakh, the initial income tax is ₹16,12,500. Since taxable income exceeds ₹50 lakh, a 10% surcharge (₹1,61,250) is added.

New tax regime slabs (FY 2024-25, 2025-26, and Tax year 2026-27)

The new regime simplifies the slab structure and reduces overall tax burden.

For financial year 2024-25

Income Tax SlabIncome Tax Rate
₹0 – ₹3 lakhNil
₹3 lakh – ₹7 lakh5%
₹7 lakh – ₹10 lakh10%
₹10 lakh – ₹12 lakh15%
₹12 lakh – ₹15 lakh20%
Above ₹15 lakh30%

For financial year 2025-26 and Tax year 2026-27

Income Tax SlabIncome Tax Rate
₹0 – ₹4 lakhNil
₹4 lakh – ₹8 lakh5%
₹8 lakh – ₹12 lakh10%
₹12 lakh – ₹16 lakh15%
₹16 lakh – ₹20 lakh20%
₹20 lakh – ₹24 lakh25%
Above ₹24 lakh30%

Surcharge under the new regime for FY 2024-25, 2025-26, and Tax year 2026-27:

Taxable IncomeSurcharge Rate
₹50 lakh – ₹1 crore10%
₹1 crore – ₹2 crore15%
Above ₹2 crore25%

How income tax differs by income group

Lower-income group: Individuals earning lower incomes face minimal tax impact under both regimes, thanks to rebates: up to ₹5 lakh under the old regime, up to ₹7 lakh under the new regime for FY 2024-25, and up to ₹12 lakh under the new regime for FY 2025-26 and Tax year 2026-27.

Middle-income group: For middle-bracket earners who invest in tax-saving instruments, the old regime can lower taxable income meaningfully. Without those deductions, the new regime's lower slabs often save more.

High-income group: High earners pay a 30% top rate under both regimes. The absence of deductions under the new regime can make the old regime more attractive for those who can maximise eligible deductions.

Old vs new tax regime: Key difference at a glance

The table below summarises how the two regimes differ across all the parameters that affect your tax liability, slabs, deductions, rebates, and compliance.

ParameterOld tax regimeNew tax regime (FY 2025-26 and Tax year 2026-27)
Basic exemption limit₹2.5 lakh (below 60), ₹3 lakh (60-79), ₹5 lakh (80+)₹4 lakh (all ages)
Number of tax slabs47
Top slab rate30% above ₹10 lakh30% above ₹24 lakh
Standard deduction (salaried)₹50,000₹75,000
Section 87A (now Section 156) rebateUp to ₹12,500 for income up to ₹5 lakhUp to ₹60,000 for total income up to ₹12 lakh
Section 80C (now Section 123) (EPF, PPF, ELSS, etc.)Available, up to ₹1.5 lakhNot available
Section 80D (now Section 126) (health insurance)AvailableNot available
Section 80CCD(1B) (now Section 124(3)) (NPS self-contribution)Available, up to ₹50,000Not available
Section 80CCD(2) (now Section 124(1)) (employer NPS)AvailableAvailable
Section 24(b) (now Section 22) (home loan interest, self-occupied)Available, up to ₹2 lakhNot available
Section 24(b) (now Section 22) (home loan interest, let-out)Available, no upper limitAvailable, no upper limit
HRA exemption (Section 10(13A) (now Sch. III(11))AvailableNot available
LTA exemption (Section 10(5) (now Sch. III(8))AvailableNot available
Maximum surcharge rate37% (above ₹5 crore)25% (above ₹2 crore)
House property loss set-off against other incomeAllowedNot allowed
Default regime (from FY 2023-24)No (opt-in required)Yes (automatic)
Switching flexibility (non-business income)Annual choiceAnnual choice
Switching flexibility (business income)One-time switch back allowedDefault; one-time switch back to old

How to choose between the old vs new tax regime

The right tax regime depends on three factors: your income bracket, your eligible deductions and exemptions, and whether your income comes from a business or salary. The old regime rewards taxpayers with deductions under Sections 80C (now Section 123), 80D (now Section 126), 24(b) (now Section 22), HRA, and LTA. The new regime offers lower slab rates and a Section 87A (now Section 156) rebate covering total income up to ₹12 lakh (FY 2025-26 and FY Tax year 2026-27) but allows almost no deductions except the employer's NPS contribution under Section 80CCD(2) (now Section 124(1). Use the framework below, then run your numbers through the calculator above to confirm.

When the new regime saves you more

The new regime is usually better in three scenarios:

Income up to ₹12 lakh (FY 2025-26 and Tax year 2026-27): The Section 87A (now Section 156) rebate makes your tax liability zero, regardless of deductions. A salaried individual earning ₹12 lakh pays no income tax under the new regime, while the old regime would tax the same income at slab rates even after deductions.

Income between ₹12 lakh and ₹15 lakh with limited deductions: The new regime's lower slabs (15% bracket starts at ₹12 lakh) typically beat the old regime unless your deductions exceed roughly ₹5.25 lakh.

Income above ₹15 lakh with few deductions: Without a home loan, HRA, or maxed-out 80C (now Section 123) investments, the lower new-regime slabs win.

The new regime also simplifies compliance: no investment proofs, no rent receipts, no Section 80C (now Section 123) tracking.

When the old regime saves you more

The old regime wins when your eligible deductions cross specific thresholds, which scale with income.

Annual IncomeApprox. deductions required for old regime to beat new
₹15 lakh₹5.25 lakh+
₹20 lakh₹7.10 lakh+
₹25 lakh₹7.75 lakh+
₹30 lakh and above₹7.75 lakh+

Thresholds calculated using FY 2025-26/ Tax year 2026-27 slabs (age below 60), excluding surcharge and cess. Confirm with your exact figures using the calculator above.

In practice, hitting these thresholds typically requires a combination of: ₹1.5 lakh under Section 80C (now Section 123) (EPF + PPF + ELSS + life insurance), ₹50,000 under Section 80CCD(1B) (now Section 124(3) (NPS self-contribution), ₹25,000 under Section 80D (now Section 126) (health insurance), ₹2 lakh under Section 24(b) (now Section 22) (home loan interest on self-occupied property), and HRA exemption based on rent paid.

The old regime is also typically better if you have substantial home loan interest on a let-out property (set-off rules are more flexible) or if you're carrying forward business losses that need to be set off against house-property or other income.

Quick decision checklist

Total income up to ₹12 lakh and salaried? New regime. The Section 87A (now Section 156) rebate covers your tax in FY 2025-26 and Tax year 2026-27.

Income between ₹12-15 lakh with deductions below ₹5 lakh? New regime, typically.

Income above ₹15 lakh and combined deductions (80C (now Section 123) + 80D (now Section 126) + 80CCD(1B) (now Section 124(3) + 24(b) (now Section 22) + HRA) exceed the threshold for your bracket? Old regime.

Business or professional income? Choose carefully. Opting into the new regime locks you in; you can switch back only once in your lifetime.

Don't fit a clear pattern? Run both calculations above and pick the lower tax.

What deductions and exemptions are allowed in the new tax regime?

Under the new tax regime, taxpayers can avail the following deductions and exemptions:

  • Employer contributions to National Pension System (NPS) under Section 80CCD(2) (now Section 124(1)
  • Section 24(b) (now Section 22): Interest paid on housing loan for a rented-out property is deductible from rental income
  • Section 10(6) (now Sch. IV(2)): Remuneration received as an official of an embassy, high commission, etc.
  • Section 10(7) (now Sch. III(9)): Allowances or perquisites paid outside India by the government to a citizen of India for rendering service outside India
  • Section 10(10) (now Section 19): Death-cum-retirement gratuity received
  • Section 10(10A) (now Section 19): Commuted value of pension received
  • Section 10(10AA) (now Section 19): Leave encashment on retirement
  • Section 10(10B) (now Section 19): Compensation received at the time of retrenchment
  • Section 10(10C) (now Section 19): Amount received/receivable on voluntary retirement or termination of service
  • Section 10(10CC) (now Sch. III(10)): Tax paid by employer on non-monetary perquisite
  • Section 10(14)(i) (now Sch. III(12)): Certain allowances received by employees referred in sub-clauses (a) to (c) of sub-rule (1) in Rule 2BB
  • Section 10(14)(ii) (now Sch. III(13)): Transport allowance granted to certain physically handicapped assessees
  • Exempt income received by a judge covered under the Payment of Salaries to Supreme Court/High Court Judges Act/Rules
  • Section 80CCH(2) (now Section 125)
  • Section 80JJAA (now Section 146)

Are taxpayers allowed to switch between different tax regimes?

Taxpayers, including individuals and Hindu Undivided Families (HUFs), can choose between the old and new tax regimes depending on their financial circumstances and income sources. This choice can be made annually or as a one-time option, based on the source of income.

For income involving business or professional activities: If an individual or HUF earns income from a business or profession and opts for the new regime in a specific financial year, the new regime applies to subsequent years as well. Taxpayers in this category can switch back to the old regime only once in their lifetime, provided circumstances change. This one-time switch-back option remains available unless the taxpayer no longer earns business or professional income.

For income excluding business or professional activities: Individuals or HUFs without business income can select their preferred regime annually. For salaried individuals, employers deduct taxes based on the chosen regime. Employees should inform their employers of their regime preference at the start of the financial year to ensure accurate TDS deduction and avoid discrepancies between Form 16 (now Form 130) and ITR data.

Taxpayers can also adjust their choice of tax regime at the time of filing their personal tax return.

Objectives of the new tax regime

Simplify the tax system: The new regime aimed to simplify the Indian tax system by eliminating numerous deductions and rebates.

Reduce tax compliance burden: A streamlined tax structure was designed to ease compliance, simplifying calculations and ITR filing.

Lower overall tax burden: Lowering tax rates across income slabs reduces the overall tax burden on individual taxpayers.

Promote tax transparency: Eliminating certain exemptions and deductions reduced opportunities for misuse and tax avoidance.

Benefits of the new tax regime

Lower tax rates: Lower slab rates reduce tax liabilities and increase disposable income for savings and investments.

Easier compliance: Reduced complexity makes it easier to calculate tax liability and file returns.

Annual choice: Taxpayers can choose between the old and new regimes annually (for non-business income), allowing flexibility in tax planning.

Capital gains under the old and new regimes

Under both regimes, the tax treatment of capital gains is largely similar. Short-term capital gains (except from equities or equity-oriented mutual funds) are taxed at applicable slab rates, which differ between the two regimes. In the old regime, Chapter VIA deductions (Sections 80C (now Section 123), 80D (now Section 126), etc.) can reduce taxable income, including capital gains, below the basic exemption limit of ₹2.5 lakh, potentially lowering or eliminating tax liability. For FY 2024-25, 2025-26, and Tax year 2026-27 under the new regime, Chapter VIA deductions are unavailable, but the revised basic exemption limit and tax slabs (as per Budget 2025) can affect the final tax liability on capital gains. This primarily benefits individuals whose only taxable income beyond ₹2.5 lakh comes from capital gains.

Set-off and carry-forward rules: Old vs new regime

Under the new tax regime, losses from house property cannot be set off against income from other categories such as salary, business or professional income, other income, or capital gains. Intra-head set-off (loss from one house property against gain from another within the same category) is still permitted.

Other set-off rules remain unchanged across the two regimes. For carry-forward of losses, the only restriction under the new regime is that depreciation related to business income cannot be carried forward. There are no other significant changes to carry-forward rules between the regimes.

Frequently Asked Questions

Is standard deduction available under the new tax regime?
Yes. Salaried taxpayers and pensioners are eligible for a standard deduction under both the old and new tax regimes. Under the old regime, the standard deduction is ₹50,000. Under the new regime, it is ₹75,000 for FY 2024-25, 2025-26, and Tax year 2026-27. This means a salaried individual earning ₹12.75 lakh effectively pays zero tax under the new regime in FY 2025-26 and Tax year 2026-27, since ₹75,000 standard deduction brings taxable income to ₹12 lakh, which is fully covered by the Section 87A (now Section 156) rebate.
Which is the default tax regime for FY 2025-26 and Tax year 2026-27?
The new tax regime is the default regime from FY 2023-24 onwards. If you do not explicitly opt for the old regime, your income will automatically be taxed under the new regime. Salaried individuals can choose the old regime by informing their employer at the start of the financial year. Taxpayers with business or professional income must file Form 10-IEA before the ITR due date to opt for the old regime; this option can be exercised only once for taxpayers with business income.
Which tax regime is better for ₹10 lakh salary?
For a salaried individual earning ₹10 lakh, the new regime is almost always better. After the ₹75,000 standard deduction, taxable income drops to ₹9.25 lakh, well within the ₹12 lakh Section 87A (now Section 156) rebate threshold, making tax liability zero in FY 2025-26 and Tax year 2026-27. The old regime would require deductions of ₹5 lakh+ to bring taxable income below the ₹5 lakh rebate cap, which is rarely achievable at this income level. Use the calculator above to confirm.
Which tax regime is better for ₹15 lakh salary?
For ₹15 lakh income, the new regime is generally better unless your eligible deductions exceed roughly ₹5.25 lakh. Under the new regime (FY 2025-26 and Tax year 2026-27), tax payable on ₹15 lakh is approximately ₹1.09 lakh after standard deduction and cess. To match this under the old regime, you would need combined deductions of ₹5.25 lakh+, typically a mix of ₹1.5 lakh under 80C (now Section 123), ₹2 lakh home loan interest under 24(b) (now Section 22), HRA exemption, ₹25,000 under 80D (now Section 126), and ₹50,000 NPS contribution under 80CCD(1B) (now Section 124(3).
Which tax regime is better for a ₹20 lakh salary?
For ₹20 lakh income, the old regime wins only if your eligible deductions exceed roughly ₹7.10 lakh. Under the new regime, tax payable on ₹20 lakh is approximately ₹2.08 lakh after cess (FY 2025-26 and Tax year 2026-27). To beat this with the old regime, you typically need maxed-out 80C (now Section 123) (₹1.5 lakh), home loan interest of ₹2 lakh, NPS ₹50,000, health insurance ₹25,000, plus HRA exemption equivalent to ₹2.85 lakh or more. Without significant HRA or home loan interest, the new regime is usually the better choice.
Is HRA exemption available under the new tax regime?
No. House Rent Allowance (HRA) exemption under Section 10(13A) (now Sch. III(11)) is available only under the old tax regime. If you receive HRA as part of your salary and pay rent, you can claim exemption under the old regime based on the least of: actual HRA received, 50% of basic salary (40% for non-metro cities), or rent paid minus 10% of basic salary. Under the new regime, HRA is fully taxable as part of your salary. If HRA is a substantial part of your CTC and you pay significant rent, this often tips the decision toward the old regime.
Is Section 80C (now Section 123) deduction allowed in the new tax regime?
No. Section 80C (now Section 123) deductions, including investments in EPF, PPF, ELSS mutual funds, life insurance premiums, NSC, tax-saving fixed deposits, and tuition fees, are available only under the old tax regime. The ₹1.5 lakh limit under 80C (now Section 123) applies only to taxpayers who opt for the old regime. Under the new regime, none of these investments reduce your taxable income, although they can still be valuable for long-term wealth building outside of tax planning.
Is home loan interest deduction allowed under the new tax regime?
It depends on the type of property. Interest paid on a home loan for a self-occupied property under Section 24(b) (now Section 22) (up to ₹2 lakh) is allowed only under the old tax regime. However, interest on a home loan for a let-out (rented) property is allowed under both the old and new regimes, it is deductible from rental income under Section 24(b) (now Section 22), with no upper limit. The principal repayment under Section 80C (now Section 123) is only allowed under the old regime.
How is income tax calculated under the new tax regime for FY 2025-26 and Tax year 2026-27?
Under the new regime for FY 2025-26 and Tax year 2026-27, tax is calculated on taxable income (gross income minus standard deduction of ₹75,000 for salaried taxpayers and employer NPS contribution under 80CCD(2) (now Section 124(1)). The slab structure is: 0% up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh, and 30% above ₹24 lakh. A Section 87A (now Section 156) rebate of up to ₹60,000 is available if total income does not exceed ₹12 lakh, effectively reducing tax to zero. A 4% health and education cess is added on top, and surcharge applies above ₹50 lakh.
How do I pay zero tax on ₹12 lakh salary under the new regime?
A salaried individual earning up to ₹12.75 lakh can pay zero income tax under the new regime in FY 2025-26 and Tax year 2026-27. Here's how: ₹12.75 lakh salary minus ₹75,000 standard deduction equals ₹12 lakh taxable income. Tax on ₹12 lakh as per the new regime slabs is ₹60,000. The Section 87A (now Section 156) rebate covers up to ₹60,000 of tax when total income does not exceed ₹12 lakh, so the entire tax liability becomes zero. Add the ₹50,000 employer NPS contribution under 80CCD(2) (now Section 124(1) and the zero-tax threshold rises to ₹13.25 lakh of CTC.
What changed in tax slabs for Tax year 2026-27?
The Tax year 2026-27 tax slabs remain identical to FY 2025-26. Under the new regime: tax-free up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh, and 30% above ₹24 lakh. The Section 87A (now Section 156) rebate continues at ₹12 lakh of total income. Old regime slabs are unchanged from prior years (₹2.5 lakh tax-free for under-60, ₹3 lakh for 60-79, ₹5 lakh for 80+; topping out at 30% above ₹10 lakh). Surcharge rates also unchanged. Always confirm with the latest Finance Act notification before filing.
Can I switch between the old and new tax regimes every year?
Yes, taxpayers can choose between the old and new tax regimes annually based on personal circumstances. This option applies only to individuals whose income sources are other than business income.
What shall I enter in the deduction or exemption field in the 1 Finance Old vs New Tax Regime Calculator?
Enter investments, loans, or allowances eligible for tax deduction or exemption under the old regime but not the new regime. This includes:
  • Section 10(13A) (now Sch. III(11)): HRA Exemption
  • Section 10(5) (now Sch. III(8)): Leave Travel Allowance
  • Section 80C (now Section 123): Life insurance premium, ELSS, PPF, EPF, etc.
  • Section 80D (now Section 126): Health insurance premium
  • Section 80CCD(1B) (now Section 124(3): Self-contribution to NPS
  • Section 80CCD(2) (now Section 124(1): Employer contribution to NPS
  • Section 24(b) (now Section 22): Interest on self-occupied home
  • Other Chapter VIA deductions
Most commonly availed deductions under the old regime are not available under the new regime. The only commonly availed deduction allowed under the new regime is employer NPS contribution under Section 80CCD(2) (now Section 124(1). Exemptions on gratuity, commuted pension, and leave encashment on leaving an employer also apply but are not availed in the normal course of employment.
Can a salaried employee change the tax regime selected for tax deductions?
Tax on a salaried employee's income is deducted by the employer based on declarations provided for the financial year. Employees can select their tax regime when making these declarations and can change the selected regime if their financial estimates change. There are no restrictions from the income tax department on this; however, internal organisational policies may vary. Taxpayers can also adjust their regime choice at the time of filing their personal tax return.
Is NPS contribution deductible under the new tax regime?
Partially. Employer contribution to the National Pension System (NPS) under Section 80CCD(2) (now Section 124(1) is the only NPS-related deduction allowed under the new tax regime, up to 14% of basic salary for central government employees, and 10% for other employees (rising to 14% for some categories in FY 2025-26 onwards). The self-contribution deductions, ₹1.5 lakh under 80CCD(1) (now Section 124(1) and the additional ₹50,000 under 80CCD(1B) (now Section 124(3), are available only under the old regime.
Which tax regime is better for senior citizens?
For senior citizens (age 60-79) and super senior citizens (80+), the choice depends on deduction levels, similar to other taxpayers, but with two regime-specific differences. The old regime gives senior citizens a higher basic exemption (₹3 lakh for 60-79 and ₹5 lakh for 80+) and allows Section 80TTB (now Section 153) (up to ₹50,000 deduction on interest from deposits). The new regime gives a uniform ₹4 lakh exemption regardless of age, with no Section 80TTB (now Section 153) benefit. Senior citizens with substantial interest income from FDs and savings typically benefit more from the old regime. Those with primarily pension income and few deductions often do better under the new regime.
What are the disadvantages of the new tax regime?
The main disadvantages of the new tax regime are: (1) loss of nearly all common deductions, including 80C (now Section 123) investments, HRA, LTA, home loan interest on self-occupied property, and 80D (now Section 126) health insurance premiums; (2) no Section 80TTB (now Section 153) benefit for senior citizens; (3) house property loss cannot be set off against salary or other income; (4) depreciation related to business income cannot be carried forward; and (5) for business income taxpayers, opting in is largely a one-way street, you can switch back to the old regime only once in your lifetime. These trade-offs are why the new regime is not automatically better for everyone, despite its lower headline rates.
What is Form 10-IEA and when do I need to file it?
Form 10-IEA is the form taxpayers with business or professional income must file to opt for the old tax regime, since the new regime is the default from FY 2023-24 onwards. The form must be filed before the due date of filing the ITR (typically 31 July for non-audit cases). Salaried individuals and other taxpayers without business income do not need to file Form 10-IEA, they can simply select the old regime in their ITR. For business taxpayers, Form 10-IEA can also be used to switch back to the new regime after previously opting for the old, but only once.
Note: Please note that new section numbers are for Tax Year 2026-27, and that the old section numbers remain in use until FY 2025-26.
Disclaimer

The Old vs New Tax Regime Calculator is provided for the purpose of awareness and ease of calculation. It is not intended to provide any advice for your specific taxation requirements. For personalised tax-related queries, please consult your tax consultant or qualified financial advisor.

Frequently Asked Questions

Is standard deduction available under the new tax regime?
Yes. Salaried taxpayers and pensioners are eligible for a standard deduction under both the old and new tax regimes. Under the old regime, the standard deduction is ₹50,000. Under the new regime, it is ₹75,000 for FY 2024-25, 2025-26, and Tax year 2026-27. This means a salaried individual earning ₹12.75 lakh effectively pays zero tax under the new regime in FY 2025-26 and Tax year 2026-27, since ₹75,000 standard deduction brings taxable income to ₹12 lakh, which is fully covered by the Section 87A (now Section 156) rebate.
Which is the default tax regime for FY 2025-26 and Tax year 2026-27?
The new tax regime is the default regime from FY 2023-24 onwards. If you do not explicitly opt for the old regime, your income will automatically be taxed under the new regime. Salaried individuals can choose the old regime by informing their employer at the start of the financial year. Taxpayers with business or professional income must file Form 10-IEA before the ITR due date to opt for the old regime; this option can be exercised only once for taxpayers with business income.
Which tax regime is better for ₹10 lakh salary?
For a salaried individual earning ₹10 lakh, the new regime is almost always better. After the ₹75,000 standard deduction, taxable income drops to ₹9.25 lakh, well within the ₹12 lakh Section 87A (now Section 156) rebate threshold, making tax liability zero in FY 2025-26 and Tax year 2026-27. The old regime would require deductions of ₹5 lakh+ to bring taxable income below the ₹5 lakh rebate cap, which is rarely achievable at this income level. Use the calculator above to confirm.
Which tax regime is better for ₹15 lakh salary?
For ₹15 lakh income, the new regime is generally better unless your eligible deductions exceed roughly ₹5.25 lakh. Under the new regime (FY 2025-26 and Tax year 2026-27), tax payable on ₹15 lakh is approximately ₹1.09 lakh after standard deduction and cess. To match this under the old regime, you would need combined deductions of ₹5.25 lakh+, typically a mix of ₹1.5 lakh under 80C (now Section 123), ₹2 lakh home loan interest under 24(b) (now Section 22), HRA exemption, ₹25,000 under 80D (now Section 126), and ₹50,000 NPS contribution under 80CCD(1B) (now Section 124(3).
Which tax regime is better for a ₹20 lakh salary?
For ₹20 lakh income, the old regime wins only if your eligible deductions exceed roughly ₹7.10 lakh. Under the new regime, tax payable on ₹20 lakh is approximately ₹2.08 lakh after cess (FY 2025-26 and Tax year 2026-27). To beat this with the old regime, you typically need maxed-out 80C (now Section 123) (₹1.5 lakh), home loan interest of ₹2 lakh, NPS ₹50,000, health insurance ₹25,000, plus HRA exemption equivalent to ₹2.85 lakh or more. Without significant HRA or home loan interest, the new regime is usually the better choice.
Is HRA exemption available under the new tax regime?
No. House Rent Allowance (HRA) exemption under Section 10(13A) (now Sch. III(11)) is available only under the old tax regime. If you receive HRA as part of your salary and pay rent, you can claim exemption under the old regime based on the least of: actual HRA received, 50% of basic salary (40% for non-metro cities), or rent paid minus 10% of basic salary. Under the new regime, HRA is fully taxable as part of your salary. If HRA is a substantial part of your CTC and you pay significant rent, this often tips the decision toward the old regime.
Is Section 80C (now Section 123) deduction allowed in the new tax regime?
No. Section 80C (now Section 123) deductions, including investments in EPF, PPF, ELSS mutual funds, life insurance premiums, NSC, tax-saving fixed deposits, and tuition fees, are available only under the old tax regime. The ₹1.5 lakh limit under 80C (now Section 123) applies only to taxpayers who opt for the old regime. Under the new regime, none of these investments reduce your taxable income, although they can still be valuable for long-term wealth building outside of tax planning.
Is home loan interest deduction allowed under the new tax regime?
It depends on the type of property. Interest paid on a home loan for a self-occupied property under Section 24(b) (now Section 22) (up to ₹2 lakh) is allowed only under the old tax regime. However, interest on a home loan for a let-out (rented) property is allowed under both the old and new regimes, it is deductible from rental income under Section 24(b) (now Section 22), with no upper limit. The principal repayment under Section 80C (now Section 123) is only allowed under the old regime.
How is income tax calculated under the new tax regime for FY 2025-26 and Tax year 2026-27?
Under the new regime for FY 2025-26 and Tax year 2026-27, tax is calculated on taxable income (gross income minus standard deduction of ₹75,000 for salaried taxpayers and employer NPS contribution under 80CCD(2) (now Section 124(1)). The slab structure is: 0% up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh, and 30% above ₹24 lakh. A Section 87A (now Section 156) rebate of up to ₹60,000 is available if total income does not exceed ₹12 lakh, effectively reducing tax to zero. A 4% health and education cess is added on top, and surcharge applies above ₹50 lakh.
How do I pay zero tax on ₹12 lakh salary under the new regime?
A salaried individual earning up to ₹12.75 lakh can pay zero income tax under the new regime in FY 2025-26 and Tax year 2026-27. Here's how: ₹12.75 lakh salary minus ₹75,000 standard deduction equals ₹12 lakh taxable income. Tax on ₹12 lakh as per the new regime slabs is ₹60,000. The Section 87A (now Section 156) rebate covers up to ₹60,000 of tax when total income does not exceed ₹12 lakh, so the entire tax liability becomes zero. Add the ₹50,000 employer NPS contribution under 80CCD(2) (now Section 124(1) and the zero-tax threshold rises to ₹13.25 lakh of CTC.
What changed in tax slabs for Tax year 2026-27?
The Tax year 2026-27 tax slabs remain identical to FY 2025-26. Under the new regime: tax-free up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh, and 30% above ₹24 lakh. The Section 87A (now Section 156) rebate continues at ₹12 lakh of total income. Old regime slabs are unchanged from prior years (₹2.5 lakh tax-free for under-60, ₹3 lakh for 60-79, ₹5 lakh for 80+; topping out at 30% above ₹10 lakh). Surcharge rates also unchanged. Always confirm with the latest Finance Act notification before filing.
Can I switch between the old and new tax regimes every year?
Yes, taxpayers can choose between the old and new tax regimes annually based on personal circumstances. This option applies only to individuals whose income sources are other than business income.
What shall I enter in the deduction or exemption field in the 1 Finance Old vs New Tax Regime Calculator?
Enter investments, loans, or allowances eligible for tax deduction or exemption under the old regime but not the new regime. This includes:
  • Section 10(13A) (now Sch. III(11)): HRA Exemption
  • Section 10(5) (now Sch. III(8)): Leave Travel Allowance
  • Section 80C (now Section 123): Life insurance premium, ELSS, PPF, EPF, etc.
  • Section 80D (now Section 126): Health insurance premium
  • Section 80CCD(1B) (now Section 124(3): Self-contribution to NPS
  • Section 80CCD(2) (now Section 124(1): Employer contribution to NPS
  • Section 24(b) (now Section 22): Interest on self-occupied home
  • Other Chapter VIA deductions
Most commonly availed deductions under the old regime are not available under the new regime. The only commonly availed deduction allowed under the new regime is employer NPS contribution under Section 80CCD(2) (now Section 124(1). Exemptions on gratuity, commuted pension, and leave encashment on leaving an employer also apply but are not availed in the normal course of employment.
Can a salaried employee change the tax regime selected for tax deductions?
Tax on a salaried employee's income is deducted by the employer based on declarations provided for the financial year. Employees can select their tax regime when making these declarations and can change the selected regime if their financial estimates change. There are no restrictions from the income tax department on this; however, internal organisational policies may vary. Taxpayers can also adjust their regime choice at the time of filing their personal tax return.
Is NPS contribution deductible under the new tax regime?
Partially. Employer contribution to the National Pension System (NPS) under Section 80CCD(2) (now Section 124(1) is the only NPS-related deduction allowed under the new tax regime, up to 14% of basic salary for central government employees, and 10% for other employees (rising to 14% for some categories in FY 2025-26 onwards). The self-contribution deductions, ₹1.5 lakh under 80CCD(1) (now Section 124(1) and the additional ₹50,000 under 80CCD(1B) (now Section 124(3), are available only under the old regime.
Which tax regime is better for senior citizens?
For senior citizens (age 60-79) and super senior citizens (80+), the choice depends on deduction levels, similar to other taxpayers, but with two regime-specific differences. The old regime gives senior citizens a higher basic exemption (₹3 lakh for 60-79 and ₹5 lakh for 80+) and allows Section 80TTB (now Section 153) (up to ₹50,000 deduction on interest from deposits). The new regime gives a uniform ₹4 lakh exemption regardless of age, with no Section 80TTB (now Section 153) benefit. Senior citizens with substantial interest income from FDs and savings typically benefit more from the old regime. Those with primarily pension income and few deductions often do better under the new regime.
What are the disadvantages of the new tax regime?
The main disadvantages of the new tax regime are: (1) loss of nearly all common deductions, including 80C (now Section 123) investments, HRA, LTA, home loan interest on self-occupied property, and 80D (now Section 126) health insurance premiums; (2) no Section 80TTB (now Section 153) benefit for senior citizens; (3) house property loss cannot be set off against salary or other income; (4) depreciation related to business income cannot be carried forward; and (5) for business income taxpayers, opting in is largely a one-way street, you can switch back to the old regime only once in your lifetime. These trade-offs are why the new regime is not automatically better for everyone, despite its lower headline rates.
What is Form 10-IEA and when do I need to file it?
Form 10-IEA is the form taxpayers with business or professional income must file to opt for the old tax regime, since the new regime is the default from FY 2023-24 onwards. The form must be filed before the due date of filing the ITR (typically 31 July for non-audit cases). Salaried individuals and other taxpayers without business income do not need to file Form 10-IEA, they can simply select the old regime in their ITR. For business taxpayers, Form 10-IEA can also be used to switch back to the new regime after previously opting for the old, but only once.

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Note: Please note that new section numbers are for Tax Year 2026-27, and that the old section numbers remain in use until FY 2025-26.
Disclaimer

The Old vs New Tax Regime Calculator is provided for the purpose of awareness and ease of calculation. It is not intended to provide any advice for your specific taxation requirements. For personalised tax-related queries, please consult your tax consultant or qualified financial advisor.