Every salaried person in India now faces the same question each year: stay with the new tax regime, or switch to the old one and claim deductions? There's no single answer — it depends on your income and how much you can actually claim.
The new regime at a glance
- Slabs: nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% for each ₹4 lakh step, and 30% above ₹24 lakh
- Standard deduction of ₹75,000 for salaried people and pensioners
- Section 87A rebate makes tax nil up to ₹12 lakh of taxable income — so up to ₹12.75 lakh of salary
- Most deductions (80C, 80D, HRA, home-loan interest) are not allowed; the employer's NPS contribution is
The old regime at a glance
- Slabs (below 60): nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above
- Standard deduction of ₹50,000; rebate up to ₹5 lakh of taxable income
- Deductions include 80C (up to ₹1.5 lakh), 80D for health insurance, an extra ₹50,000 for NPS under 80CCD(1B), HRA and up to ₹2 lakh of home-loan interest
Three examples
- ₹12.75 lakh salary, no deductions: new regime ₹0, old regime about ₹1.87 lakh
- ₹15 lakh salary with only 80C and 80D (₹1.75 lakh): new regime ₹97,500, old regime about ₹2.03 lakh
- ₹15 lakh salary with 80C, 80D, NPS, ₹1.8 lakh HRA exemption and ₹2 lakh home-loan interest: new regime ₹97,500, old regime about ₹84,760
All figures include the 4% health and education cess. The pattern is clear: for most people the new regime is cheaper, and the old one only wins when deductions are large — typically a combination of HRA and home-loan interest on top of 80C.
How to decide
- Add up deductions you will genuinely claim — don't count investments you'd make only for tax
- Compare both regimes with your real numbers every year; salaried people can choose each year when filing
- If you have business income, switching back and forth is restricted, so check the rules
The free income tax calculator compares both regimes side by side with your deductions, rebate, surcharge and cess. The HRA calculator works out your tax-free HRA, including the eight-city metro rule. Tax rules change with each Budget, so confirm with the Income Tax Department or a tax professional before filing.