Old or new tax regime? A simple way to decide
With no tax up to ₹12 lakh of income in the new regime, most people now save by switching. Here's how to tell if you're one of the exceptions.
Since the 2025 Budget, the new tax regime has been the default and the more generous choice for most people. With the section 87A rebate, there is no tax on taxable income up to ₹12 lakh, which means up to ₹12.75 lakh of salary after the ₹75,000 standard deduction.
When the old regime can still win
The old regime only makes sense if your deductions are large. That usually means a combination of:
- HRA exemption if you pay substantial rent in a metro city
- Home loan interest of up to ₹2 lakh on a self-occupied house
- Full 80C of ₹1.5 lakh, plus 80D health insurance and NPS under 80CCD(1B)
If these add up to less than roughly ₹4–8 lakh (the break-even rises with income), the new regime is likely better.
Try it with your own numbers
Use the old vs new regime calculator. It shows exactly how much in deductions you’d need before the old regime comes out ahead.
Two practical points
- Salaried employees can choose a different regime each year when filing their return, whatever they told their employer.
- Anyone with business income can switch back from the new regime only once, so decide carefully.
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