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New vs Old Regime — India Income Tax FY26
Published May 8, 2026
New Regime vs Old Regime — India Income Tax FY 2025–26
The question every salaried Indian faces each April: stick with the old regime or switch to the new one? The answer depends entirely on how many deductions you can actually claim.
Estimate only — not tax advice. Verify at incometax.gov.in and consult a chartered accountant before filing.
Quick comparison at a glance
| New Regime | Old Regime | |
|---|---|---|
| Default from | FY 2023–24 | Must opt in annually |
| Standard deduction | ₹75,000 | ₹50,000 |
| Section 80C | ❌ Not available | ✅ Up to ₹1,50,000 |
| HRA exemption | ❌ Not available | ✅ Actual/formula-based |
| Home loan interest (24b) | ❌ Not available | ✅ Up to ₹2,00,000 |
| NPS deduction (80CCD(1B)) | ❌ Not available | ✅ Up to ₹50,000 |
| Leave travel allowance | ❌ Not available | ✅ Twice in 4 years |
| Section 87A rebate limit | ₹12,00,000 | ₹5,00,000 |
New regime slab rates — FY 2025–26
| Annual income | Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Key benefit: for salaried individuals earning up to ₹12.75 lakh gross, tax is effectively zero (₹75,000 standard deduction + 87A rebate covers the full liability).
Old regime slab rates — unchanged
| Annual income | Rate |
|---|---|
| Up to ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Key benefit: the old regime's higher rates are offset by a wide basket of deductions — 80C, HRA, home loan, NPS, LTA, and more.
The break-even rule of thumb
The new regime saves tax when deductions are small. The old regime wins when deductions are large.
A commonly cited break-even for a ₹10–15L income range: if your total deductions (80C + HRA + home loan interest) exceed ₹3–3.5 lakh, the old regime often saves more tax. Below that, the new regime is simpler and usually cheaper.
This is income-sensitive — the break-even amount shifts as income rises because higher-income taxpayers sit in the 30% slab where deductions have more rupee value.
Worked example — ₹15 lakh gross, FY 2025–26
New regime:
- Taxable = ₹15L − ₹75K standard deduction = ₹14.25L
- Slab tax: ₹0 + ₹20K + ₹40K + ₹33,750 = ₹93,750
- Cess (4%): ₹3,750 → Total: ₹97,500
Old regime with ₹3L deductions (80C + some HRA):
- Taxable = ₹15L − ₹50K std deduction − ₹3L = ₹11.5L
- Slab tax: ₹0 + ₹12,500 + ₹1,00,000 + ₹45,000 = ₹1,57,500
- Cess: ₹6,300 → Total: ₹1,63,800
Old regime with ₹5L deductions (80C + HRA + home loan interest):
- Taxable = ₹15L − ₹50K − ₹5L = ₹9.5L
- Slab tax: ₹0 + ₹12,500 + ₹90,000 = ₹1,02,500
- Cess: ₹4,100 → Total: ₹1,06,600
At ₹15L gross with ₹5L deductions, the old regime saves ₹97,500 − ₹1,06,600 = ₹9,100 less than new regime — the new regime still wins here. With ₹7L in deductions the old regime starts to edge ahead.
How to decide
- List all deductions you actually claim: 80C (PF, ELSS, PPF, life insurance premium), HRA, home loan interest, NPS.
- Enter your gross salary into the India Income Tax Calculator under the new regime.
- Subtract your deductions from gross salary and re-enter under the old regime.
- Compare the "Income tax + cess" rows — pick the lower number.
- Confirm your choice with your employer's payroll team before April (the regime choice locks in for TDS for the full year for most employers).
Common mistakes to avoid
- Forgetting the FY / AY distinction — income earned in FY 2025–26 goes into the ITR filed in AY 2026–27. Most tax software auto-fills the right assessment year.
- Partial-year job changes — if you switched employers mid-year, consolidate Form 16s from both; your old employer may have withheld under the wrong regime assumption.
- Assuming the new regime is always better for high earners — at ₹30L+ with a home loan and NPS, the old regime can save ₹50,000–₹1,00,000+ annually.