Choosing between the new and old tax regime can save or cost you thousands of rupees every year. The answer depends on your income, deductions, and financial situation. This guide gives you the complete comparison with real numbers so you can make the right choice for FY 2026-27.
Quick Comparison: New vs Old Tax Regime
| Feature | New Regime (Default) | Old Regime |
|---|---|---|
| Tax Slabs | 6 slabs (0-30%) | 4 slabs (0-30%) |
| Standard Deduction | ₹75,000 | ₹50,000 |
| 87A Rebate | Up to ₹7 lakh income | Up to ₹5 lakh income |
| Section 80C | ❌ Not available | ✅ Up to ₹1,50,000 |
| Section 80D | ❌ Not available | ✅ Up to ₹50,000 |
| HRA Exemption | ❌ Not available | ✅ Available |
| Home Loan Interest (24b) | ❌ Not available (self-occupied) | ✅ Up to ₹2,00,000 |
| LTA | ❌ Not available | ✅ Available |
| 80CCD NPS | ❌ Not available (employer allowed) | ✅ Up to ₹50,000 |
| 80E (Education Loan) | ❌ Not available | ✅ No limit |
| 80G (Donations) | ❌ Not available | ✅ Available |
| Switching | Salaried: yearly; Business: once | Always available |
Real Calculation: ₹10 Lakh Income
Let's compare both regimes for a salaried person with ₹10,00,000 annual income:
Scenario 1: No Deductions
| New Regime | Old Regime | |
|---|---|---|
| Income | ₹10,00,000 | ₹10,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| Taxable Income | ₹9,25,000 | ₹9,50,000 |
| Tax | ₹41,250 | ₹1,12,500 |
| Tax Payable | ₹42,900 | ₹1,17,000 |
Winner: New Regime (saves ₹74,100!)
Scenario 2: ₹3 Lakh Deductions (80C + HRA + 80D)
| New Regime | Old Regime | |
|---|---|---|
| Income | ₹10,00,000 | ₹10,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| 80C + 80D + HRA | N/A | ₹3,00,000 |
| Taxable Income | ₹9,25,000 | ₹6,50,000 |
| Tax | ₹41,250 | ₹52,500 |
| Tax Payable | ₹42,900 | ₹54,600 |
Winner: New Regime (still saves ₹11,700)
Scenario 3: ₹5 Lakh Deductions (Maximize Everything)
| New Regime | Old Regime | |
|---|---|---|
| Income | ₹10,00,000 | ₹10,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| All Deductions | N/A | ₹5,00,000 |
| Taxable Income | ₹9,25,000 | ₹4,50,000 |
| Tax | ₹41,250 | ₹10,000 |
| Tax Payable | ₹42,900 | ₹10,400 |
Winner: Old Regime (saves ₹32,500!)
Key Takeaway
The break-even point depends on your deductions. If total deductions exceed ₹4,00,000, the old regime usually wins. Below that, the new regime is typically better. Always calculate both!
Compare Both Regimes Instantly
Our free calculator shows tax under both regimes side by side.
Compare Regimes Free →Decision Framework
- List all your deductions: 80C, 80D, HRA, home loan, NPS, education loan, donations.
- If total deductions > ₹4 lakh: Old regime likely better.
- If total deductions < ₹2.5 lakh: New regime almost always better.
- If deductions are between ₹2.5-4 lakh: Calculate both — it depends on income level.
- Use a calculator: Don't guess. Our free calculator shows exact numbers.
Pro Tip for Businesses
If you are a business owner or freelancer, the old regime allows you to deduct business expenses, depreciation, and professional tax. This can significantly reduce taxable income. However, once you choose the new regime, switching back to old is allowed only ONCE in your lifetime.