How the two regimes compare
| Point | New regime | Old regime |
|---|---|---|
| Status | Default | Must be chosen |
| Standard deduction (salary) | ₹75,000 | ₹50,000 |
| Rebate | Tax nil up to ₹12 lakh taxable income | Tax nil up to ₹5 lakh taxable income |
| HRA exemption | Not allowed | Allowed |
| 80C, 80D | Not allowed | Allowed within limits |
| Home loan interest (self-occupied) | Not allowed | Up to ₹2 lakh |
| Employer NPS contribution | Allowed within limits | Allowed within limits |
New regime slab rates
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
Rates shown are those announced for FY 2025-26. A 4% health and education cess applies on tax, and surcharge applies on income above ₹50 lakh.
Who usually benefits from the new regime
- Salaried people with taxable income up to about ₹12.75 lakh, who pay no tax after the standard deduction and rebate
- People who do not pay rent, have no home loan and make few tax-saving investments
- Young professionals early in their careers
- Anyone who prefers not to lock money into tax-saving products
Who may still benefit from the old regime
- People paying high rent in a city who claim large HRA exemptions
- Homeowners paying significant interest on a home loan for a self-occupied house
- Those who use the full 80C limit, pay health insurance for parents and claim other deductions together
- Some senior citizens with large deductions
How to compare with your own numbers
- Write down your gross salary and other income for the year.
- List deductions you can actually claim under the old regime, with proof.
- Compute tax under both regimes, including cess.
- Choose the lower one, and remember that the choice affects TDS by your employer too.
Our income tax regime calculator does this comparison in under a minute. For larger or more complex incomes, a planning call helps.
Can you switch every year?
Salaried individuals without business income can generally choose the regime each year when filing the return. Individuals with business or professional income face restrictions on switching back and forth. Tell your employer your choice at the start of the year so TDS is correct; you can still change it when filing.
Frequently asked questions
{{ f.q }}
{{ f.a }}
Sources
Information is for general guidance and not a substitute for professional advice. Rules, rates and due dates change; confirm with us before acting.