From FY 2024-25, the New Tax Regime is the default. If you do nothing, the income tax department will apply the new regime to your ITR. But is it actually better for you? Here's a complete comparison with real examples.
Tax Slabs Comparison: New vs Old Regime FY 2025-26
| Income Range | New Regime Rate | Old Regime Rate |
|---|---|---|
| Up to ā¹3,00,000 | Nil | Nil |
| ā¹3,00,001 ā ā¹7,00,000 | 5% | Nil (up to ā¹2.5L), 5% (ā¹2.5Lā5L) |
| ā¹7,00,001 ā ā¹10,00,000 | 10% | 20% |
| ā¹10,00,001 ā ā¹12,00,000 | 15% | 30% |
| ā¹12,00,001 ā ā¹15,00,000 | 20% | 30% |
| Above ā¹15,00,000 | 30% | 30% |
Key Deductions: What You Can & Cannot Claim
| Deduction | New Regime | Old Regime |
|---|---|---|
| Standard Deduction (Salaried) ā ā¹75,000 | ā Available | ā Available (ā¹50,000) |
| Section 80C (PPF, ELSS, LIC) ā ā¹1.5 lakh | ā Not available | ā Available |
| Section 80D (Health Insurance) ā up to ā¹75,000 | ā Not available | ā Available |
| HRA Exemption | ā Not available | ā Available |
| Home Loan Interest (Section 24b) ā ā¹2 lakh | ā Not available | ā Available |
| NPS Employer Contribution ā Section 80CCD(2) | ā Available | ā Available |
| Leave Travel Allowance (LTA) | ā Not available | ā Available |
Real Examples: Which Regime Saves More?
š Example 1: Salary ā¹8 Lakh, No Investments
| Item | New Regime | Old Regime |
|---|---|---|
| Gross Salary | ā¹8,00,000 | ā¹8,00,000 |
| Standard Deduction | ā¹75,000 | ā¹50,000 |
| Taxable Income | ā¹7,25,000 | ā¹7,50,000 |
| Tax (before rebate) | ā¹27,500 | ā¹62,500 |
| Rebate u/s 87A | Nil (income >7L) | Nil |
| Total Tax + Cess | ā¹28,600 | ā¹65,000 |
š Example 2: Salary ā¹10 Lakh, With ā¹2.5 Lakh Deductions
| Item | New Regime | Old Regime |
|---|---|---|
| Gross Salary | ā¹10,00,000 | ā¹10,00,000 |
| Standard Deduction | ā¹75,000 | ā¹50,000 |
| 80C (PPF/ELSS/LIC) | ā | ā¹1,50,000 |
| 80D (Health Insurance) | ā | ā¹25,000 |
| HRA | ā | ā¹25,000 |
| Taxable Income | ā¹9,25,000 | ā¹7,50,000 |
| Total Tax + Cess | ā¹54,600 | ā¹65,000 |
š Example 3: Salary ā¹15 Lakh, Maximum Deductions ā¹4.5 Lakh
| Item | New Regime | Old Regime |
|---|---|---|
| Gross Salary | ā¹15,00,000 | ā¹15,00,000 |
| All Deductions | ā¹75,000 | ā¹4,50,000 |
| Taxable Income | ā¹14,25,000 | ā¹10,50,000 |
| Total Tax + Cess | ā¹1,71,600 | ā¹1,40,400 |
Simple Rule: Which Regime to Choose?
- Income ā¤ ā¹7 lakh ā New Regime (zero tax with 87A rebate)
- Income ā¹7ā12 lakh, deductions < ā¹2 lakh ā New Regime
- Income ā¹7ā12 lakh, deductions > ā¹2.5 lakh ā Old Regime
- Income > ā¹15 lakh, deductions > ā¹4 lakh ā Old Regime
- No investments, no HRA, no home loan ā New Regime
FAQs
Is new tax regime default from AY 2025-26?
Yes. From FY 2024-25, the new tax regime is the default option. If you want to use the old regime, you must explicitly opt-in when filing your ITR or submit Form 10-IEA to your employer.
Can I switch regime every year?
Salaried individuals can switch every year. Business owners and professionals who opt out of the new regime cannot easily switch back.
Which is better for home loan?
If you have a home loan with significant interest (ā¹2 lakh under Section 24b), the old regime saves more tax ā especially for income above ā¹10 lakh.
Still confused? Use our free Income Tax Calculator to compare both regimes with your actual numbers in under 2 minutes.