For FY 2025-26 (continuing under the 2025 Act), the new regime is the default. Its headline benefit: with the enhanced Section 87A rebate, a resident individual with taxable income up to ₹12 lakh pays effectively zero tax — salaried people up to ₹12.75 lakh after the ₹75,000 standard deduction.
How ₹12 lakh becomes zero tax
Tax is computed on the slabs, then the Section 87A rebate (up to ₹60,000) removes it for eligible residents up to ₹12 lakh. Above ₹12 lakh, normal slab tax applies (marginal relief may apply just over the line).
When the old regime can still win
- Big deductions — home-loan interest, 80C, 80D, HRA — that together beat the new regime's simpler benefit.
- Specific exemptions the new regime doesn't allow.
Two people, both ₹14 lakh gross salary:
| New regime | Old regime | |
|---|---|---|
| Deductions used | ₹75,000 std only | ₹75k + ₹1.5L 80C + ₹2L home loan + ₹25k 80D |
| Taxable income | ₹13.25 L | ₹9.5 L |
| Approx tax | lower for most low-deduction cases | can be lower only if deductions are large |
Lesson: with heavy genuine deductions the old regime can win — otherwise the default new regime is simpler and usually better. Always compute both.
Don't choose a regime from a WhatsApp forward. Run YOUR numbers both ways every year — a home loan or a new 80C investment can flip the answer. If the two are within a few thousand rupees, pick the simpler new regime for fewer document hassles.
Not sure how this applies to you?
Rules change and the answer depends on your exact numbers. Get a qualified professional to review choosing between the new and old tax regime for your case — before you act.
Talk to a KyaTax expert →Frequently asked questions
Is ₹12 lakh income really tax-free?
For eligible resident individuals under the new regime, the 87A rebate makes tax nil up to ₹12 lakh taxable (₹12.75L salaried after standard deduction). Verify eligibility for your case.
Can I switch regimes every year?
Salaried without business income can generally choose each year; business income faces restrictions. Confirm your position.
Which is better for me?
It depends on your deductions. Compute both; if close, ask an expert.
Related: Income Tax Calculator · More guides · Our expert panel