Old vs New Tax Regime
Compare income tax under old and new regime side-by-side. Enter HRA, 80C, 80D to see which saves more.
Your Details
New Regime
Better₹97,500
Taxable
₹14,25,000
Effective %
6.50%
Net Income
₹14,02,500
Old Regime
₹1,46,640
Taxable
₹10,95,000
Effective %
9.78%
Net Income
₹13,53,360
Verdict
The new regime saves you ₹49,140 this year. Your deductions are not worth claiming at this income level.
Which tax regime is better — Old or New?
Under the new regime (FY 2026-27), income up to ₹12 lakh is effectively tax-free thanks to the ₹60,000 rebate. Above ₹12L, rates are lower — but you cannot claim most deductions.
The old regime has higher base rates but lets you subtract HRA, 80C (₹1.5L), 80D, home loan interest (up to ₹2L), NPS (₹50K), and more. If your total deductions exceed roughly ₹3.75 lakh, old regime often wins. Below that, new regime almost always wins.
Deductions available only in the Old Regime
- HRA exemption (metro 50% / non-metro 40% of basic)
- Section 80C investments (PPF, ELSS, life insurance, home loan principal)
- Section 80D health insurance premium
- Section 24(b) home loan interest up to ₹2L
- Section 80CCD(1B) NPS up to ₹50K
- Leave Travel Allowance, Standard Deduction ₹50K
Frequently Asked Questions
Everything you need to know, in one place.
Which regime is better for me?
If your total deductions (HRA + 80C + 80D + home loan interest + NPS) exceed roughly ₹3.75 lakh, the old regime saves more. Below that, the new regime wins. Budget 2025's ₹60K rebate makes the new regime extremely attractive for most middle-income salaried employees.
Can I switch regimes every year?
Yes, if you are salaried. Just declare your choice to your employer at the start of the year or choose while filing ITR. However, business owners and professionals with Section 44ADA income can switch to new regime only once — switching back to old is not allowed.
Does HRA exemption still work in the new regime?
No. HRA exemption is only allowed under the old tax regime. If you pay significant rent in a metro city, this alone can make the old regime save more tax.
At what income is the new regime always better?
For income up to ₹12 lakh, the new regime is unbeatable due to the ₹60K rebate — your tax is zero. For ₹12L-15L with under ₹3L deductions, new regime still wins by ₹10-20K annually.
How does the tax savings change at different income levels?
At ₹8L salary: new regime wins by ~₹30K (zero vs ~₹30K tax). At ₹15L salary with max deductions: old regime may win by ~₹15K. At ₹25L salary with max deductions: old regime may win by ~₹40K. At ₹50L+ (surcharge zone): old regime more attractive because higher tax rates amplify deduction value.
Does home loan interest deduction still work?
Section 24(b) home loan interest (up to ₹2L) is only available in the old regime for a self-occupied home. In the new regime, only let-out property interest is allowed (and net loss is not set off against salary).
If I choose the old regime, can I still claim the ₹75,000 standard deduction?
No — old regime has a ₹50,000 standard deduction, not ₹75,000. The ₹75,000 figure is new-regime-only.
What happens to 80C investments if I move to the new regime?
Your existing PPF, ELSS, life insurance policies continue — you simply lose the tax deduction. PPF continues earning interest tax-free. ELSS units still follow the 3-year lock; new investments will not get 80C benefits under new regime.
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