Old vs New Tax Regime: Which One Should You Choose?
The better regime depends on your deductions, exemptions, and income mix.
Compare both regimes every year before filing.
When the New Regime is usually better
- You claim few or no deductions (80C, 80D, home-loan interest, etc.).
- You prefer lower slab rates with a simpler return structure.
- Your salary structure has limited exemption components (like HRA/LTA).
- Your deduction total is relatively small versus taxable income.
When the Old Regime is usually better
- You fully use major deductions (for example 80C and 80D).
- You claim home-loan interest deduction (subject to applicable rules).
- You claim exemptions such as HRA/LTA where eligible.
- Your total eligible deductions/exemptions are materially high.
Quick practical rule
If your total eligible deductions and exemptions are high, the Old Regime can be better.
If they are low, the New Regime often wins.
Always verify with a side-by-side tax calculation using your actual numbers.
Note: Tax rules, rebate limits, and surcharge treatment can change by Budget/FY.
Recheck applicable provisions for the filing year.
Understand how income tax is calculated under Old and New Regimes before using the calculator.
Tax Slabs
- 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%
Rules and Limits
- Standard Deduction: ₹75,000 (applies to salary and pension)
- Most deductions and exemptions are not available (HRA, LTA, 80C, 80D generally not allowed)
- Employer NPS contribution (80CCD(2)) is allowed
✔ Tax rebate available up to ₹12,00,000 taxable income (subject to conditions).
Tax Slabs
- 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%
Rules and Limits
- Standard Deduction: ₹50,000 (applies to salary and pension)
- Allows Chapter VI-A deductions (80C, 80D, 80E, etc.), HRA, LTA, home loan interest (section 24b) and others
✔ Tax rebate available up to ₹5,00,000 taxable income (subject to conditions).
- Standard Deduction: Old ₹50,000; New ₹75,000 (salary & pension only)
- 80C (EPF, PPF, ELSS, life insurance, principal repayment on home loan) – up to ₹1,50,000
- 80CCD(1B) – Additional NPS deduction up to ₹50,000
- 80D – Health insurance premium (limits vary by age)
- 80E – Interest on education loan (no upper limit for interest deduction)
- 80G – Donations (conditions apply)
- Home loan interest (section 24b) – up to ₹2,00,000 for self-occupied property (subject to conditions)
- HRA, LTA and other salary exemptions (Old Regime only)
- Savings interest: 80TTA up to ₹10,000 for non-senior taxpayers; 80TTB up to ₹50,000 for senior citizens (applies to savings account interest)
- Salary income before exemptions
- Interest from savings accounts, fixed deposits and recurring deposits
- Rental income (after 30% standard deduction on rent)
- Dividend and other taxable income
All these incomes are combined to compute taxable income under the chosen regime; some incomes (capital gains, crypto) are taxed separately.
- Equity Short-Term Capital Gains (STCG) (holding ≤ 12 months, STT paid): typically taxed at 20% for listed equity transactions (verify current law)
- Equity Long-Term Capital Gains (LTCG) (holding > 12 months): taxed at 12.5% on gains above the exemption threshold without indexation for listed equities where STT is paid; LTCG exemption ₹1,25,000 per year (verify current law)
- Other asset classes (debt funds, property) follow different rates and indexation rules
Capital gains are calculated separately and then added to total tax liability; confirm exact rates and thresholds with official sources.
- Flat tax of 30% on gains from transfer of virtual digital assets
- No deductions or set-offs allowed against this income
- Losses from such transfers cannot be set off or carried forward
Cess (4%) applies on top of the tax; surcharge may apply for very high incomes. Verify any recent changes before filing.
- Calculate gross income from all sources
- Subtract salary exemptions (Old Regime) and apply standard deduction for salary/pension
- Apply Chapter VI-A deductions where applicable (Old Regime)
- Apply slab rates as per selected regime to compute slab tax
- Add special taxes (capital gains, crypto) calculated separately
- Add Health & Education Cess 4% on total tax; surcharge may apply for high incomes
Final tax = slab tax + special taxes + cess (4%).
- Old Regime: ₹50,000
- New Regime: ₹75,000
- Available only on salary and pension income
- Applied automatically by the calculator; no proof required
- 30% standard deduction allowed on rent received (no proof required)
- Home loan interest (section 24b) is treated separately
Example: Annual rent ₹3,00,000 → Taxable rental income = ₹2,10,000 (30% deduction = ₹90,000).
- Available only if you live in a rented house and receive HRA as part of salary
- Not available in the New Regime
- Exemption is part of salary exemptions and must be computed using basic salary and dearness allowance (if applicable)
HRA exemption = least of: actual HRA received; rent paid – 10% of basic salary; 50% of basic salary for metro cities or 40% for non-metro cities.
- Interest from bank and post office savings accounts
- Deduction under 80TTA up to ₹10,000 for non-senior taxpayers
- Deduction under 80TTB up to ₹50,000 for senior citizens (applies to savings interest)
- FD and RD interest are taxable and not covered by 80TTA/80TTB
Example: Savings interest ₹18,000 → Deduction ₹10,000 (80TTA) → Taxable ₹8,000 for non-senior taxpayers.