How to Choose Between the Old and New Tax Regime (FY 2025-26 and 2026-27)

Step by step

1. 1

   List your deductions

   80C, 80D, NPS 80CCD(1B), home-loan interest, HRA exemption, 80E, 80G and others you actually have.

2. 2

   Compute tax both ways

   Use the income-tax calculator — enter the same income with and without deductions.

3. 3

   Compare with the break-even

   If your deductions are below the break-even for your salary (table below), the new regime is cheaper.

4. 4

   Tell your employer

   Declare your regime to the employer at the start of the year so TDS is right — you can still change it in the ITR.

5. 5

   Record the choice

   Salaried: select it in the ITR filed by the due date. Business: file Form 10-IEA before the due date.

Break-even deductions (salaried, FY 2025-26)

Allowed in both regimes

• Standard deduction (₹75,000 new, ₹50,000 old)
• Employer's NPS contribution — 80CCD(2) (14% of salary in the new regime)
• Agniveer Corpus Fund — 80CCH
• Deduction for additional employee cost — 80JJAA (business)

Common mistakes

• Choosing the old regime out of habit
• Forgetting that a belated return is always in the new regime
• Business owners switching back and forth without counting the one-time limit

Frequently asked questions

Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.