India's new tax regime usually wins for people with few deductions, but the old regime can still be cheaper with large 80C, HRA, or home loan interest claims — here's how to tell which applies to you.
The Decision in One Sentence
If your 80C + 80D + HRA + home loan interest + NPS deductions add up to a large number relative to your income, the old regime often wins; if you have few deductions, the new regime's lower rates usually win.
Quick Reference: New Regime (FY 2026-27)
| Taxable Income | Rate |
|---|---|
| 0 – 4,00,000 | 0% |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| 24,00,001+ | 30% |
Standard deduction ₹75,000 (salaried). Section 87A rebate fully cancels tax up to ₹12,00,000 taxable income — making salaried income up to ₹12,75,000 effectively tax-free.
Quick Reference: Old Regime
| Taxable Income | Rate |
|---|---|
| 0 – 2,50,000 | 0% |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| 10,00,001+ | 30% |
Standard deduction ₹50,000 (salaried), plus itemized deductions: 80C (up to ₹1.5 lakh), 80D, HRA, home loan interest (up to ₹2 lakh), NPS (up to ₹50,000). Section 87A rebate cancels tax only up to ₹5,00,000 taxable income.
A Worked Comparison
A salaried employee earning ₹15 lakh with no significant deductions pays ₹97,500 under the new regime versus ₹2,57,400 under the old regime — the new regime wins decisively here. But the same salary with ₹3,50,000 in combined 80C/80D/home-loan-interest deductions brings old-regime taxable income down enough that the comparison can flip, depending on the exact numbers — which is why running both calculations matters more than assuming.
Common Mistakes
- Assuming the new regime is always better. It usually is for people with few deductions, but large old-regime-only deductions can still tip the balance.
- Forgetting you must actively opt for the old regime. The new regime is the default — non-business taxpayers can switch between regimes each year when filing, but it doesn't happen automatically.
Calculate your exact figure now.
🇮🇳 India Tax Calculator (Both Regimes)Frequently Asked Questions
Which tax regime is better in India?
It depends on your deductions. Run both calculations — our India Tax Calculator does this automatically and shows which one is cheaper for your specific numbers.
Can I switch between regimes every year?
Yes, for salaried individuals — you can choose either regime when filing your return each year. Business owners face more restrictions on switching back and forth.