New vs Old Tax Regime Calculator India
Compare income tax under old and new tax regimes and instantly find which option saves more money. Includes all deductions, rebates, cess and surcharge for FY 2026-27.
Old vs New Regime
Side-by-side comparison
FY 2026-27 Ready
Latest tax slabs
All Deductions
80C, 80D, HRA, NPS
Rebate + Cess
87A + surcharge auto
Quick Answer: Which tax regime is better for a ₹12 lakh salary?
For a ₹12 lakh annual salary with ₹1.5 lakh in 80C and ₹50,000 standard deduction, the old regime is typically better. Old regime taxable income drops to ₹10 lakh with deductions, resulting in ~₹1.17 lakh tax. New regime with only ₹75,000 standard deduction gives taxable income of ₹11.25 lakh, resulting in ~₹1.31 lakh tax. You save ~₹14,000 with the old regime. However, if you have minimal deductions, the new regime may win.
Compare Old vs New Tax Regime
Enter your salary, deductions, and age group to instantly see which tax regime saves more money. All rebates, cess, and surcharge auto-calculated.
Include interest income, rental income, freelance earnings, capital gains, etc.
HRA exemption applies only in the old regime. Metro = Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad.
PPF, ELSS, LIC, NSC, 5-year FD, tuition fees, EPF contribution, etc.
Self + family: ₹25k (₹50k for seniors). Parents: additional ₹25k (₹50k if senior).
Interest on self-occupied house loan. Only in old regime.
Additional ₹50,000 over and above 80C limit. Only in old regime.
Donations (80G), education loan interest (80E), disability (80U), etc.
Smart Tax Insights
- The new regime saves you ₹32,240 because your deductions are low. Without 80C, 80D, or HRA benefits, the lower new regime slabs work in your favor.
- NPS contribution under Section 80CCD(1B) gives an additional ₹50,000 deduction exclusive of 80C — only in the old regime.
Results appear here
Enter your salary and deductions to compare tax under old and new regimes side by side.
Tax Comparison Charts
See how tax changes across salary levels, deduction amounts, and income ranges. Make data-driven regime choices.
Tax Payable Across Salary Levels (₹15L deductions assumed old)
Annual tax under old vs new regime for different CTC levels. Old regime assumes ₹1.5L 80C + ₹50k standard deduction.
Low Deductions?
If your total deductions are under ₹1.5 lakh, the new regime is usually better. It has lower slab rates and a higher rebate threshold of ₹7 lakh.
High Deductions?
If you maximize 80C (₹1.5L), 80D (₹25k+), HRA, and home loan interest, the old regime often wins by ₹15,000–₹50,000 annually.
₹7 Lakh Income?
Under the new regime, taxable income up to ₹7 lakh gets full rebate u/s 87A — your tax is zero. In the old regime, the threshold is ₹5 lakh.
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Open CalculatorNew vs Old Tax Regime Explained
The new tax regime offers lower slab rates but disallows most deductions. The old tax regime keeps higher rates but allows 80C, 80D, HRA, home loan interest, and NPS deductions. For FY 2026-27, the new regime rebate threshold is ₹7 lakh, while the old regime threshold remains ₹5 lakh.
India introduced the new tax regime in Union Budget 2020 as an optional alternative to the existing old regime. The core difference is simple: the new regime gives you lower tax rates across all slabs, but in exchange, you forfeit most deductions and exemptions that the old regime allows.
In the old regime, you can claim deductions under Section 80C (up to ₹1.5 lakh), 80D (medical insurance up to ₹1 lakh), HRA exemption, home loan interest (Section 24b up to ₹2 lakh), NPS contribution (additional ₹50,000), and various other sections. These deductions can reduce your taxable income significantly — sometimes by ₹3–4 lakh or more.
The new regime for FY 2026-27 has six tax slabs starting from nil tax on income up to ₹4 lakh, and a full rebate under Section 87A for taxable income up to ₹7 lakh (meaning zero tax). The standard deduction in the new regime is ₹75,000, while in the old regime it is ₹50,000.
Which one should you choose? It depends entirely on your deduction profile. If you are a salaried employee with home loan EMI, health insurance, EPF/VPF contributions, and HRA, the old regime often saves ₹15,000–₹50,000 annually. If you have minimal deductions — say under ₹1.5 lakh total — the new regime typically wins.
Tax Slab Comparison for FY 2026-27
The new regime has six progressive slabs (0%, 5%, 10%, 15%, 20%, 25%, 30%) while the old regime has four slabs (0%, 5%, 20%, 30%). The new regime starts taxing at ₹4 lakh while the old regime exempts up to ₹2.5 lakh (₹3L for seniors, ₹5L for super seniors).
New Regime Slabs (FY 2026-27)
| Up to ₹4,00,000 | Nil |
| ₹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% |
| Above ₹24,00,000 | 30% |
Old Regime Slabs (FY 2026-27)
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior Citizens (60-80): Nil up to ₹3,00,000
Super Senior Citizens (80+): Nil up to ₹5,00,000
Notice how the new regime has finer granularity — it breaks the 5% and 20% old slabs into smaller bands, making the tax burden more progressive. Someone earning ₹12 lakh in the new regime pays 5% on ₹4 lakh (₹8L–₹4L) and 10% on the next ₹4 lakh (₹12L–₹8L), instead of 20% on ₹7 lakh (₹12L–₹5L) in the old regime.
However, the old regime allows deductions that can pull your taxable income into a lower bracket. A ₹15 lakh earner with ₹2.5 lakh in deductions falls to ₹12.5 lakh taxable — still in the 20% slab, but paying less overall tax due to the lower base.
Deductions Allowed Under Old Regime
The old regime allows over 50 deductions and exemptions, while the new regime permits only standard deduction (₹75,000). Key old-regime-only deductions include 80C (₹1.5L), 80D (₹1L), HRA, home loan interest (₹2L), and NPS (₹50k).
| Deduction | Max Limit | Old Regime | New Regime |
|---|---|---|---|
| Standard Deduction | ₹50,000 / ₹75,000 | ₹50,000 | ₹75,000 |
| Section 80C (PPF, ELSS, LIC, etc.) | ₹1,50,000 | Allowed | Not Allowed |
| Section 80D (Health Insurance) | ₹1,00,000 | Allowed | Not Allowed |
| HRA Exemption | Variable | Allowed | Not Allowed |
| Home Loan Interest (24b) | ₹2,00,000 | Allowed | Not Allowed |
| NPS (80CCD(1B)) | ₹50,000 | Allowed | Not Allowed |
| Donations (80G) | Variable | Allowed | Not Allowed |
| Education Loan (80E) | No limit | Allowed | Not Allowed |
| Disability (80U) | ₹1,25,000 | Allowed | Not Allowed |
| Employer NPS (80CCD(2)) | 10% of basic | Allowed | Allowed |
The key insight: if your total deductions exceed approximately ₹1.75 lakh, the old regime starts becoming competitive. At ₹2.5 lakh+ in deductions, it almost always wins. The only deduction common to both regimes is employer NPS contribution under 80CCD(2) — up to 10% of basic salary, with no upper cap for government employees.
Who Should Choose the New Tax Regime?
The new regime is ideal for taxpayers with minimal deductions — renters without HRA, those without home loans, freelancers, first-job employees, and anyone with total deductions below ₹1.5 lakh. It also benefits those with income between ₹5–7 lakh due to the higher rebate threshold.
First-Time Employees
Young professionals just starting their career often have no home loan, minimal insurance, and no HRA to claim. New regime is simpler and often cheaper.
Renters Without HRA
If your employer does not provide HRA and you pay rent, you get no HRA benefit in either regime. New regime lower rates help.
No Home Loan
Home loan interest (Section 24b) is one of the biggest old-regime advantages at ₹2 lakh. Without it, the old regime loses a key edge.
Income ₹5–7 Lakh
The new regime rebate threshold is ₹7 lakh (vs ₹5 lakh old). If your taxable income falls in this range, new regime can mean zero tax.
Minimal 80C Investment
If you do not invest in PPF, ELSS, or LIC and your EPF contribution is low, you are not utilizing the ₹1.5 lakh 80C limit.
Freelancers & Consultants
Professionals with business income who do not get salary structure benefits like HRA or employer EPF often find the new regime favorable.
Salaried Employee Tax Saving Tips
Salaried employees can save up to ₹78,000 in tax annually by fully utilizing 80C (₹1.5L), 80D (₹25k), and NPS (₹50k) in the old regime. Reimbursements like LTA, phone, and fuel also reduce taxable income.
- 1
Maximize 80C Every Year
Invest the full ₹1.5 lakh in PPF (₹1.5L/year), ELSS mutual funds (tax-saving SIPs), LIC premiums, 5-year tax-saver FDs, or principal repayment on home loan. This alone can save ₹45,000 in tax at the 30% slab.
- 2
Get Health Insurance (80D)
Buy a family floater health policy. Premium up to ₹25,000 (₹50,000 for senior parents) is deductible. This saves ₹7,500–₹15,000 in tax.
- 3
Claim HRA Properly
Submit rent receipts to your employer. The HRA exemption is the least of: actual HRA received, 50%/40% of basic, or rent paid minus 10% of basic. Metro vs non-metro matters.
- 4
NPS for Extra ₹50,000
Open an NPS Tier-1 account and contribute ₹50,000 under Section 80CCD(1B). This is over and above the ₹1.5 lakh 80C limit. Saves ₹15,000 at 30% slab.
- 5
Home Loan = Double Benefit
Principal repayment counts under 80C. Interest payment gives Section 24b deduction up to ₹2 lakh. Together, a ₹30 lakh home loan can give ₹3.5L+ in deductions.
- 6
Optimize Salary Structure
Negotiate for tax-free components: LTA (Leave Travel Allowance), telephone reimbursement, fuel reimbursement, meal coupons, and employer-provided accommodation.
- 7
Contribute to VPF
Voluntary Provident Fund (VPF) contributions above the mandatory 12% EPF also qualify under 80C. It is risk-free and gives 8.15% interest (FY 2026 rate).
- 8
Sukanya Samriddhi for Daughters
If you have a girl child below 10, SSY gives 8.2% tax-free returns and qualifies under 80C. Maturity is tax-exempt.
- 9
ELSS for Wealth + Tax
Equity Linked Savings Scheme (ELSS) mutual funds have the shortest 3-year lock-in among 80C options. Historically returns average 12–15% CAGR.
- 10
File ITR on Time
Late filing after July 31 attracts a penalty of ₹5,000 (₹1,000 if income under ₹5L). You also lose the ability to carry forward losses.
How Rebate Under Section 87A Works
Section 87A provides a full tax rebate for taxable income up to ₹5 lakh in the old regime and ₹7 lakh in the new regime. This means zero tax liability for individuals in these brackets. The rebate amount equals the total tax payable before cess.
Section 87A is one of the most powerful provisions for middle-income taxpayers. It was introduced to reduce the tax burden on low-income earners. For FY 2026-27, the rebate structure differs between the two regimes.
Old Regime — Section 87A
- Taxable income up to ₹5 lakh: Full rebate
- Rebate amount: Equal to total tax payable
- Cess still applicable on taxable portion if any
- No rebate above ₹5 lakh taxable income
New Regime — Section 87A
- Taxable income up to ₹7 lakh: Full rebate
- Rebate amount: Equal to total tax payable
- Marginal relief available near ₹7.2–7.5L
- No rebate above ₹7 lakh taxable income
Practical example: A person with ₹7.5 lakh gross salary in the new regime gets ₹75,000 standard deduction, making taxable income ₹6.75 lakh. This is under the ₹7 lakh rebate threshold, so their tax is zero. In the old regime with the same salary and minimal deductions, taxable income might be ₹6.5–7 lakh, but the old regime rebate only covers up to ₹5 lakh — leaving some tax liability.
HRA and Home Loan Interest Benefits
HRA exemption and home loan interest deduction (Section 24b) are two of the most significant old-regime-only benefits. HRA can save ₹50,000–₹2 lakh annually, while home loan interest gives up to ₹2 lakh deduction per year. Neither is available in the new regime.
HRA Exemption Calculation
HRA exemption is the least of three: (a) actual HRA received, (b) rent paid minus 10% of basic salary, or (c) 50% of basic for metro cities (Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad) or 40% for non-metro.
Example: HRA Calculation (Metro)
Home Loan Interest (Section 24b)
Interest paid on a home loan for a self-occupied property is deductible up to ₹2 lakh per year under Section 24b. For let-out property, there is no upper cap on interest deduction (though loss from house property is capped at ₹2 lakh to be set off against other income).
Additionally, principal repayment qualifies under Section 80C (within the ₹1.5 lakh limit). So a home loan gives you a double tax benefit — interest under 24b and principal under 80C. This is a major reason why the old regime wins for homeowners.
Combined Benefit Example (₹30L Home Loan, 8.5% Interest)
| Annual Interest (Year 1) | ₹2,52,000 | Deductible under 24b: ₹2,00,000 |
| Annual Principal (Year 1) | ₹48,000 | Counts under 80C |
| Stamp Duty & Registration | ₹1,50,000 | One-time 80C (Year 1) |
| Total Deduction Benefit | ₹3,98,000 | ₹2L (24b) + ₹1.5L (80C principal) + ₹48K (80C stamp duty part) |
Common Tax Filing Mistakes to Avoid
The most common mistakes include choosing the wrong regime without calculating, missing ITR filing deadlines, forgetting to claim 80D, mismatching Form 16 with AIS, and not reporting all income sources including interest and capital gains.
Choosing Regime Blindly
Many salaried employees select a regime because their colleague chose it. Always use a calculator to compare both regimes with your actual deductions.
Missing ITR Deadline
Filing after July 31 attracts a penalty of ₹5,000. If your income is under ₹5 lakh, the penalty is ₹1,000. Late filers also lose loss carry-forward.
Ignoring 80D Health Insurance
Many taxpayers forget to claim 80D for health insurance premiums. Family floater premiums up to ₹25,000 (₹50,000 for seniors) are fully deductible.
Form 16 vs AIS Mismatch
Always cross-check your Form 16 with the Annual Information Statement (AIS) on the Income Tax portal. Banks report interest, which may not match your records.
Not Reporting All Income
Interest from savings accounts, FDs, rental income, and capital gains must all be reported. The IT department cross-references AIS data.
Wrong PAN Linked to Employer
Ensure your PAN is correctly linked with your employer. TDS credits will not reflect in Form 26AS if there is a PAN mismatch.
Forgetting Previous Employer Income
If you changed jobs during the year, include income from both employers. New employers may not have your previous salary data.
Not Availing Marginal Relief
Near rebate thresholds (₹5L old, ₹7L new), marginal relief ensures you do not pay more tax just because you earned slightly more. Check if it applies.
Methodology & Sources
Tax calculations are based on the Union Budget 2025-26 provisions applicable for FY 2026-27 (AY 2027-28). Old regime slabs follow the Income Tax Act 1961 with rebate u/s 87A for income up to ₹5 lakh. New regime slabs and rebate threshold of ₹7 lakh are as per Finance Act 2025.
Surcharge is applied progressively: 10% for income above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and 37% above ₹5 crore. Health and education cess at 4% is applied on tax after surcharge. Marginal relief is applied near rebate thresholds.
References: Income Tax Department India (incometaxindia.gov.in), Finance Act 2025, CBDT circulars, NSDL tax slabs. Reviewed by DU Tech Team. Last updated May 2026.
Tax calculations are estimates and may vary based on deductions, exemptions and latest government rules. Always consult a chartered accountant for complex tax situations.
Frequently Asked Questions — New vs Old Tax Regime
Find answers to the most common tax regime questions Indian taxpayers ask every year.
For salaried employees with significant deductions (80C, 80D, HRA, home loan interest), the old regime is typically better. If your total deductions exceed ₹1.75–2 lakh, old regime savings usually outweigh the new regime lower rates. For employees with minimal deductions (under ₹1.5L total), the new regime often wins due to lower slab rates and a higher rebate threshold of ₹7 lakh.
Still unsure which regime is better?
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