Same salary, two completely different tax bills, and the gap between them can run into lakhs. India's new tax regime and old tax regime aren't just two ways of arriving at the same number — they're built on entirely different logic, and which one actually saves you money depends almost entirely on how many deductions you can genuinely claim.
The short version
Stack up your 80C, 80D, HRA, home loan interest, and NPS deductions. If that total is large relative to your income, the old regime often comes out cheaper despite its steeper brackets. If your deduction list is thin, the new regime's lower rates usually win outright — no contest.
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.
Putting real numbers against it
Take someone earning ₹15 lakh with essentially no deductions to claim. New regime: ₹97,500 in tax (that figure already includes the standard 4% health and education cess on top of the base tax). Old regime, same salary, same lack of deductions: ₹2,57,400 — more than double. Not a close call.
Now give that same person ₹3,50,000 in genuine combined 80C, 80D, and home loan interest deductions. Old-regime taxable income drops enough that the comparison can flip entirely, depending on the exact mix — which is exactly why running both calculations for your actual numbers beats assuming either regime is automatically better.
Two mistakes worth avoiding
- Assuming the new regime automatically wins. It usually does for anyone without significant deductions to claim — but a genuinely large old-regime-only deduction stack can still flip the outcome, so don't skip the actual comparison.
- Forgetting the old regime isn't the default anymore. The new regime applies unless you actively choose otherwise. Salaried, non-business taxpayers can switch each year at filing time, but nothing happens 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.
Is the 4% cess included in these tax figures?
Yes — the worked comparison above already includes the standard 4% health and education cess on top of the base tax calculation, since that cess applies under both regimes and is part of your real final tax bill either way.