Rule of thumb: if your deductions (80C, 80D, home loan interest, HRA) are small, the new regime usually wins. If they are large, work out both. Use our free calculator.
New regime slabs (FY 2025-26, AY 2026-27)
| Taxable income | Tax rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
A rebate makes tax nil for resident individuals with taxable income up to ₹12 lakh under the new regime. Salaried people also get a ₹75,000 standard deduction, so salary up to about ₹12.75 lakh carries no tax. Special-rate income such as capital gains is treated separately.
Old regime slabs
| Taxable income | Tax rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5 lakh – ₹5 lakh | 5% |
| ₹5 lakh – ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Tax is nil up to ₹5 lakh taxable income with the rebate. The standard deduction for salaried people is ₹50,000. Higher exemption limits apply to senior citizens.
What you give up in the new regime
- Section 80C (PF, PPF, ELSS, life insurance, tuition fees, home loan principal)
- Section 80D health insurance
- HRA and LTA exemptions
- Interest on a home loan for a self-occupied house
Employer contribution to NPS under section 80CCD(2) is still allowed in the new regime.
Who can switch, and when
- Salaried and pensioners (no business income) can choose either regime every year while filing the ITR.
- Business or professional income: the choice is made by filing Form 10-IEA, and you can switch back to the new regime only once.
A quick way to decide
- Add up all deductions you will actually claim in the old regime.
- Work out tax under both regimes on the same income.
- Pick the lower one, and remember to tell your employer at the start of the year so TDS matches.
Frequently asked questions
Which regime is the default?
The new regime is the default. You must opt for the old regime if you want it.
Is income up to ₹12 lakh really tax-free?
Under the new regime, resident individuals with taxable income up to ₹12 lakh pay no tax because of the rebate. This does not cover special-rate income such as capital gains.
Can I claim HRA in the new regime?
No. HRA exemption is available only in the old regime.
I chose the wrong regime with my employer. Can I change it?
Yes. Salaried people can choose a different regime while filing the ITR. Any excess TDS comes back as a refund.
This guide is general information based on the law as on the date above. Rules and dates change through notifications, so check your own case with us before acting.