Every March, Deepika's WhatsApp fills up with messages from her HR: "Submit your tax declaration by Friday." She always picks old regime because her father told her to. But her colleague Arjun always picks new regime. Last year, Arjun paid ₹18,000 less tax than Deepika. Same salary. Different regime choice.
FY 2025-26 changed the game again. Budget 2025 updated slabs and rebate limits. If you're still picking a regime out of habit, you might be leaving money on the table.
New Regime 2025-26 Slabs (Updated Budget 2025)
- ₹0 – ₹4 lakh: 0%
- ₹4 – ₹8 lakh: 5%
- ₹8 – ₹12 lakh: 10%
- ₹12 – ₹16 lakh: 15%
- ₹16 – ₹20 lakh: 20%
- ₹20 – ₹24 lakh: 25%
- Above ₹24 lakh: 30%
Plus standard deduction of ₹75,000. Rebate u/s 87A: income up to ₹12 lakh can effectively pay zero tax under new regime after rebate.
Old Regime Slabs + Deductions
Old regime has lower standard deduction (₹50,000) but allows 80C (₹1.5L), 80D (₹25K health insurance), HRA exemption, home loan interest u/s 24(b) up to ₹2 lakh, and NPS 80CCD(1B) additional ₹50,000.
If you're maximising these deductions, old regime often wins for higher earners with home loans.
When Is Old Regime Better?
- You have a home loan (₹2L interest deduction saves serious tax)
- You maximise 80C investments — ELSS, PPF, PF, insurance
- Your HRA exemption is high (living in Bangalore or Mumbai on rent)
- Combined deductions exceed ₹3–4 lakh annually
When Is New Regime Better?
- Income below ₹12 lakh — zero tax after rebate!
- No major deductions or investments to claim
- You want simpler filing without collecting proofs
- Living in own house (no HRA or rent receipts)
Real Comparison: Which Regime Saves More?
| Annual Salary | Old Regime Tax | New Regime Tax | Better Choice |
|---|---|---|---|
| ₹8 lakh (no deductions) | ~₹33,800 | ~₹0 | New |
| ₹12 lakh (₹2L 80C + HRA) | ~₹45,000 | ~₹0 | New (unless heavy HRA) |
| ₹15 lakh (home loan + 80C) | ~₹1,10,000 | ~₹1,45,000 | Old |
| ₹20 lakh (full deductions) | ~₹2,20,000 | ~₹2,85,000 | Old |
Numbers vary by exact deductions. Use our Income Tax Calculator to compare both regimes instantly. Calculate your in-hand salary after tax deductions. Plan your SIP investments to maximise 80C savings if you choose old regime.