Head to head
Old vs new tax regime
The new regime is now the default. It has lower slab rates and a bigger standard deduction (₹75,000), and makes income up to ₹12 lakh effectively tax-free — but it scraps almost every exemption.
The old regime taxes more on paper, but rewards you for 80C investments, 80D health premiums, HRA and home-loan interest. Whether it wins comes down to one question: how much do you actually claim?
| New regime | Old regime | |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| Tax-free up to (rebate) | ₹12L taxable | ₹5L taxable |
| 80C / 80D / HRA | Not allowed | Allowed |
| Home-loan interest | Not allowed (self-occupied) | Up to ₹2L |
| Slab rates | Lower | Higher |
| Best for | Few deductions | Heavy deductions |
Pick New regime if…
- You don't have big 80C/80D investments or rent to claim.
- You're early-career and prefer take-home over locking money in tax-savers.
- Your taxable income is at or below ₹12 lakh.
Pick Old regime if…
- You max 80C (₹1.5L), pay health premiums, and claim HRA or home-loan interest.
- Your total deductions comfortably exceed ~₹3.5–4 lakh.
- You'd invest in ELSS/PPF anyway, so the lock-in isn't a sacrifice.
The verdict
If you claim serious deductions, the old regime often still wins. If you don't — which is most young earners — the new regime almost always leaves more in your hand and skips the paperwork. Don't guess: run your exact numbers through both.
Common questions
- Is income up to ₹12 lakh really tax-free in the new regime?
- Yes, for FY 2025-26 the Section 87A rebate makes tax zero up to ₹12 lakh of taxable income (about ₹12.75 lakh gross for salaried, after the ₹75,000 standard deduction). Earn more and normal slabs apply, with marginal relief near the threshold.
- Can I switch between regimes?
- Salaried people without business income can choose afresh every year at filing. Those with business income face restrictions on switching back to the new regime once they opt out.