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Updated for 2026. This article was revised on 10 November 2026 for the Income-tax Act, 2025, Budget 2026 and GST 2.0.
The two slab structures
| New regime (FY 2025-26 & TY 2026-27) | Rate | Old regime (below 60) | Rate |
|---|---|---|---|
| Up to ₹4 lakh | Nil | Up to ₹2.5 lakh | Nil |
| ₹4–8 lakh | 5% | ₹2.5–5 lakh | 5% |
| ₹8–12 lakh | 10% | ₹5–10 lakh | 20% |
| ₹12–16 lakh | 15% | Above ₹10 lakh | 30% |
| ₹16–20 lakh | 20% | ||
| ₹20–24 lakh | 25% | ||
| Above ₹24 lakh | 30% |
The new regime gives a ₹75,000 standard deduction and a rebate that makes tax nil up to ₹12 lakh taxable income. The old regime gives a ₹50,000 standard deduction and allows HRA, 80C, 80D, home-loan interest, NPS and other deductions.
How much in deductions does the old regime need?
| Annual salary | New-regime tax | Old regime wins only if deductions exceed about |
|---|---|---|
| Up to ₹12.75 lakh | Nil | — new regime always wins |
| ₹15 lakh | ₹97,500 | ₹5.4 lakh |
| ₹18 lakh | ₹1,50,800 | ₹6.4 lakh |
| ₹20 lakh | ₹1,92,400 | ₹7.1 lakh |
| ₹25 lakh and above | ₹3,19,800 at ₹25 lakh | ₹8 lakh |
80C (₹1.5 lakh) + 80D (₹25,000) + NPS (₹50,000) + home-loan interest (₹2 lakh) add up to ₹4.25 lakh. Without a large HRA exemption, most people do not reach the break-even.
Who may still prefer the old regime
- Salary above ₹15 lakh with a large HRA exemption (high rent in a 50% city) and a home loan.
- Parents' health insurance, education loan interest and NPS on top.
- Remember: HRA exemption, 80C and self-occupied home-loan interest are not allowed in the new regime.
Switching rules
- Salaried people without business income can choose either regime every year in the return.
- With business or professional income, opting out of the new regime needs Form 10-IEA by the due date, and you can come back to the new regime only once.
- Tell your employer your choice at the start of the year so TDS is right; you can still change it in the return.
Compare with your numbers
Use the income tax calculator — it computes both regimes side by side for FY 2024-25, FY 2025-26 and Tax Year 2026-27, with surcharge and marginal relief.
Founder, VJ & Associates, Jind — Taxation Lawyer & Legal Consultant, backed by the firm's Chartered Accountants, Company Secretaries and Tax Advocates. About the author · vinujaglan.com
General information as on 10 Nov 2026, not advice for your specific case. Laws, rates and dates change — see the disclaimer.
