New Tax Regime vs Old Tax Regime — Quick Comparison
| Feature | New Tax Regime (Default) | Old Tax Regime |
|---|---|---|
| Default from FY 2024-25 | ✅ Yes | Must opt-in |
| Standard Deduction | ₹75,000 | ₹50,000 |
| HRA Exemption | ❌ Not available | ✅ Up to 50% of basic in metros |
| 80C (PF, ELSS, LIC, PPF) | ❌ Not available | ✅ Up to ₹1.5 lakh |
| 80D (Health insurance) | ❌ Not available | ✅ Up to ₹25,000–₹75,000 |
| NPS 80CCD(1B) | ❌ Not available | ✅ Additional ₹50,000 |
| Tax-free up to | ₹7 lakh (with rebate) | ₹5 lakh (with rebate) |
| Simplicity | ✅ Very simple | Complex — requires planning |
New Regime Tax Slabs — FY 2025-26
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Key rebate: If taxable income ≤ ₹7 lakh, tax = ₹0 under new regime (Section 87A rebate).
Old Regime Tax Slabs
| Income Range | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Who Benefits from the Old Regime?
The old regime is better when your deductions and exemptions are large enough to offset the higher tax rates. The key deductions:
- HRA Exemption: If you pay significant rent (especially in metros), this can be ₹1–3 lakh+ per year
- Section 80C (₹1.5 lakh): EPF, ELSS, PPF, LIC premium, home loan principal, NSC
- Section 80D (₹25,000–₹75,000): Health insurance premiums for self and parents
- NPS 80CCD(1B) (₹50,000): Additional NPS contribution over and above 80C
- Home loan interest 24(b) (₹2 lakh): For self-occupied property
Break-Even Analysis — When Old Regime Wins
The old regime is beneficial when total deductions and exemptions exceed the following thresholds:
| Annual CTC | Required Deductions for Old Regime to Win | Recommendation |
|---|---|---|
| Up to ₹7 LPA | Any amount | New regime (tax = ₹0 anyway) |
| ₹8–10 LPA | ₹2–3 lakh+ | Old regime if paying high rent + 80C |
| ₹10–15 LPA | ₹3–4 lakh+ | Compare both — depends on HRA |
| ₹15–20 LPA | ₹4–5 lakh+ | Often old regime wins with HRA + 80C + NPS |
| Above ₹20 LPA | ₹5 lakh+ | Compare carefully — new regime lower rates help |
Real Example: ₹12 LPA — Which Regime Saves More?
Assuming: 40% basic, metro city, ₹25,000/month rent, max 80C investment:
| Calculation | New Regime | Old Regime |
|---|---|---|
| Gross Income | ₹10,95,000 | ₹10,95,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| HRA Exemption | Nil | ₹1,44,000 |
| 80C Deduction | Nil | ₹1,50,000 |
| 80D (health insurance) | Nil | ₹25,000 |
| Employee PF (80C included) | Nil | Included above |
| Taxable Income | ₹10,20,000 | ₹7,26,000 |
| Tax + 4% Cess | ₹78,000 | ₹47,320 |
| Winner | ✅ Old Regime saves ₹30,680 |
💵 Calculate Your Exact Tax Under Both Regimes
Use our free Salary Calculator to compare new vs old regime for your specific CTC and deductions!
Calculate My Salary →Frequently Asked Questions
Q: Can I switch between new and old regime every year?
Yes — salaried employees can switch between regimes every year when filing their ITR. However, self-employed individuals can switch back to old regime only once in a lifetime. Inform your employer at the start of each financial year which regime you want TDS calculated under.
Q: Is NPS deduction available in the new regime?
The employer's NPS contribution (Section 80CCD(2)) is available in the new regime — up to 14% of basic salary for central government employees and 10% for others. The employee's own NPS contribution under 80CCD(1B) (additional ₹50,000) is NOT available in the new regime.
⚠️ Disclaimer
Tax laws change annually. This article reflects FY 2025-26 rules. Always verify current rules on incometax.gov.in or consult a qualified CA before filing.