Which law applies. Section numbers on this page are those of the Income-tax Act, 2025, which took effect on 1 April 2026 and governs tax year 2026-27 onwards. For earlier tax years the corresponding provisions of the Income-tax Act, 1961 (Section 80CCD(2)) continue to apply.
Tax & Savings
Old vs New Tax Regime
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FY 2026–27 side-by-side tax comparison with all deductions. See which regime saves you more.
What Old Regime and New Regime Actually Mean
Old Regime. The long-standing structure: a ₹2.5 lakh basic exemption with higher slab rates, but access to the full set of deductions and exemptions — 80C, 80D, HRA, home loan interest and the rest.
New Regime. The default regime under section 115BAC: a ₹4 lakh basic exemption and lower slab rates, but almost no deductions. A section 87A rebate of up to ₹60,000 means no tax at all on taxable income up to ₹12 lakh.
There is no regime that is better in general. It is arithmetic: the old regime charges more but lets you subtract more. The crossover depends entirely on how much you can actually prove you spent or invested — not on how much you intend to.
How this page differs. This is the general side-by-side tool for any income. For one salary worked through in rupees, see Old vs New Tax Regime on a ₹15 LPA Salary. To enter each deduction separately, use the Tax Saving Calculator; for age category and other income, use the Income Tax Calculator.
Key Differences
| Feature | Old Regime | New Regime |
|---|---|---|
| Standard deduction | ₹50,000 | ₹75,000 |
| 80C deduction | Up to ₹1.5 lakh | Not available |
| 80D (health insurance) | Up to ₹25,000–50,000 | Not available |
| HRA exemption | Available | Not available |
| Basic exemption | ₹2.5 lakh | ₹4 lakh (nil tax up to ₹12 lakh after 87A rebate) |
| Slab rates under the new regime | n/a | Nil to ₹4L; 5% to ₹8L; 10% to ₹12L; 15% to ₹16L; 20% to ₹20L; 25% to ₹24L; 30% above |
| Section 87A rebate | Up to ₹12,500, income up to ₹5 lakh | Up to ₹60,000, income up to ₹12 lakh |
| Employer NPS, 80CCD(2) | Available | Available — one of the few deductions retained |
| Which applies if you do nothing | Must be opted into | Default regime |
When to Choose Which
Choose Old Regime
- You claim well over ₹5 lakh in deductions
- You have home loan interest (80EEA)
- You pay rent in a metro (HRA benefit)
- You invest in 80C instruments fully
Choose New Regime
- Fewer deductions (< ₹2L typically)
- Simpler filing preferred
- Income up to ₹12 lakh (nil tax after rebate)
- No home loan or HRA benefit
Worked Examples
The calculator above does this for your actual numbers. The pattern below shows where the crossover usually sits for a salaried taxpayer.
| Scenario | Old Regime | New Regime |
|---|---|---|
| Income ₹12 lakh, few deductions | Tax payable on the deductions you cannot claim | Nil tax, via the ₹60,000 rebate |
| Income ₹18 lakh, deductions about ₹2 lakh | Rarely wins at this level of deductions | Usually ahead |
| Income ₹18 lakh, deductions above about ₹6.4 lakh | Often ahead — 80C, 80D, HRA and home loan interest together | Loses the benefit of those deductions |
The rough rule for a salaried taxpayer: the old regime only wins once genuine, documented deductions are large — typically ₹5 lakh or more (about ₹5.4 lakh at ₹15 lakh of income and ₹6.4 lakh at ₹18 lakh). Below that the new regime’s lower rates and larger rebate usually win outright.
How Each Is Taxed
Both regimes now give salaried taxpayers a standard deduction — ₹75,000 under the new regime and ₹50,000 under the old. Combined with the ₹4 lakh exemption and the ₹60,000 rebate, a salaried person under the new regime pays no tax on income up to about ₹12.75 lakh. The new regime is the default: if you make no election, it applies automatically. Salaried taxpayers may switch each year when filing; those with business income face tighter restrictions on switching back. Budget 2026 made no change to these slabs, rates or the rebate, so the same figures apply to both FY 2025–26 and FY 2026–27.
These rules apply to both FY 2025–26 and FY 2026–27 — Budget 2026 made no change to capital gains rates or holding periods.
Advantages and Limitations
Old Regime
Works for you when
- You pay significant rent and can claim HRA
- You have home loan interest to set off
- You genuinely use the full ₹1.5 lakh of 80C plus 80D
Watch out for
- Every claim needs documentation and proof
- Higher slab rates apply if deductions fall short
- A smaller basic exemption at ₹2.5 lakh
New Regime
Works for you when
- Nil tax up to ₹12 lakh of taxable income
- No proofs to gather and no lock-ins to maintain
- Lower rates across every slab
Watch out for
- No 80C, 80D or HRA benefit
- Little tax reason to hold tax-saving instruments
- Rarely optimal for someone with large genuine deductions
How to Decide
Work through these with your real numbers, not your intended ones.
- Is your taxable income ₹12 lakh or below? The new regime almost certainly wins — the rebate takes tax to nil.
- Add up deductions you can actually document. Not what you plan to invest — what you have proof of.
- Is that total under about ₹5 lakh? The new regime wins.
- Do you have HRA plus home loan interest plus full 80C? Work out the HRA part with the HRA exemption calculator, then run both in the calculator above — the old regime may still win.
- Remember the new regime is the default. If you want the old one, you must actively opt in.
A caution worth stating: do not buy a tax-saving product purely to justify the old regime. Choose the investment on its own merits, then pick the regime that fits the result.
Frequently Asked Questions
Sources and Method
Figures on this page are computed by the calculator above from the inputs you enter. Worked examples assume the stated return is earned evenly and ignore exit load, expense ratio and inflation, so treat them as illustrations of the mechanism rather than forecasts.
- Capital gains treatment — Income Tax Act, sections 111A and 112A, as amended by the Finance Act 2024 and unchanged by Budget 2026.
- Rupee cost averaging — AMFI investor education.
- Mutual fund product rules — SEBI (Mutual Funds) Regulations.
Last reviewed: . This page explains how two investment methods behave. It is general information, not investment advice, and mutual fund investments carry market risk.
The concept behind the number
This comparison gives you a figure. These pages give you the idea it comes from, the words on the inputs, and the article that works through the decision.