Old vs. New Tax Regime Comparator
Compare tax liability between the Old and New tax regimes under recent Union Budget slab rates. Find the most tax-efficient regime for your profile.
Understanding Old vs. New Tax Regimes
The choice between the Old Tax Regime and the New Tax Regime is one of the most critical decisions for Indian taxpayers.
The New Tax Regime offers significantly lower tax rates and wider tax slabs but does not allow you to claim common tax-saving exemptions. The only primary deduction allowed under the New Regime is the Standard Deduction (increased to ₹75,000 in Budget 2024 for FY 2025-26).
The Old Tax Regime features higher tax slabs but allows you to reduce your taxable income through a wide array of deductions:
- Section 80C: Invest up to ₹1.5 Lakh in ELSS, PPF, NPS, or life insurance.
- Section 10(13A) HRA Exemption: Exemptions for rent paid to landlords.
- Section 24(b): Interest paid on home loans up to ₹2 Lakh.
- Section 80D: Medical insurance premiums up to ₹25,000 (self) and ₹50,000 (parents).
- Section 80CCD(1B): Additional NPS contribution up to ₹50,000.
Frequently Asked Questions
Which tax regime is better for FY 2025-26?
For most taxpayers with minimal investments or deductions, the New Tax Regime is more beneficial due to lower slab rates and a full tax rebate up to ₹12 lakh taxable income. However, if you claim high deductions like HRA, Section 80C (₹1.5L), Home Loan Interest (₹2L), and Health Insurance (Section 80D), the Old Tax Regime may save more tax.
Can I switch between the Old and New Tax Regimes every year?
Salaried individuals who do not have business or professional income can switch between the Old and New Tax Regimes every year at the time of filing their ITR.
What is the standard deduction amount for FY 2025-26?
For FY 2025-26, the standard deduction is ₹75,000 under the New Tax Regime and ₹50,000 under the Old Tax Regime.