India's income tax system now offers two regimes — the Old Tax Regime (with deductions and exemptions) and the New Tax Regime (lower rates, no most deductions). Since the new regime became the default from FY 2023-24, millions of taxpayers are confused about which is better for them. The answer depends entirely on your income level and how much you invest in tax-saving instruments. This guide gives you a clear, calculation-based framework to decide.
💡 Not sure which tax regime is better for you? Our CA team computes your exact tax under both regimes — based on your actual salary, investments, HRA, and home loan — so you choose correctly. Send an Enquiry →
1. New vs Old Regime — Tax Rate Comparison
| Income Slab | Old Regime | New Regime |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% | 5% (nil up to ₹3L) |
| ₹5,00,001 – ₹6,00,000 | 20% | 5% |
| ₹6,00,001 – ₹9,00,000 | 20% | 10% |
| ₹9,00,001 – ₹12,00,000 | 20–30% | 15% |
| ₹12,00,001 – ₹15,00,000 | 30% | 20% |
| Above ₹15,00,000 | 30% | 30% |
Rebate under Section 87A: Old regime — zero tax up to ₹5 lakh. New regime — zero tax up to ₹7 lakh (₹7.75 lakh after standard deduction of ₹75,000).
For income up to ₹7.75 lakh with no other income — new regime gives zero tax. Above this, your deductions determine which regime wins. Get our CA team to calculate both for you precisely.
Calculate Both Regimes →2. What You Give Up in the New Regime
The new regime has lower rates but you cannot claim these major deductions/exemptions:
- Section 80C — ₹1.5 lakh (PF, ELSS, LIC, PPF, home loan principal, tuition fees)
- Section 80D — health insurance premium for self and family
- HRA exemption on house rent paid
- LTA (Leave Travel Allowance) exemption
- Section 80CCD(1B) — additional NPS contribution (₹50,000)
- Interest on home loan for self-occupied property (Section 24b — ₹2 lakh)
- Section 80TTA/80TTB — savings/FD interest deduction for senior citizens
What you retain: Standard deduction of ₹75,000 from salary, employer's NPS contribution (80CCD(2)), and gratuity/leave encashment exemptions.
3. Which Regime is Better — The Framework
- Income below ₹7.75 lakh: New regime — zero tax after rebate (no deductions needed)
- ₹7.75 lakh – ₹15 lakh: Depends on deductions — if you claim > ₹3–4 lakh in deductions (80C + HRA + home loan), old regime often wins
- Above ₹15 lakh: If you maximise all deductions (80C + HRA + home loan + 80D + NPS), old regime can save more; new regime wins if deductions are low
- Business owners / freelancers: New regime is simpler — no investment-linked compliance
4. Switching Between Regimes
- Salaried individuals: Can switch every year — inform employer in April; can also change at ITR filing time
- Business income earners: Can switch only once from new to old — once switched to old, cannot return to new (except by closing business income)
- Default from FY 2023-24: New regime — opt into old regime explicitly using Form 10-IEA (business income earners) or by selecting at ITR filing (salaried)
New vs Old Regime — Get the Right Answer for Your Specific Income
Our CA team computes your exact tax liability under both regimes — based on your salary, investments, HRA, home loan, and other deductions — and tells you definitively which saves more. No guesswork. Serving salaried employees, business owners, and professionals across India.
New vs Old Regime Calculation →Disclaimer: This article is for general informational and educational purposes only. It does not constitute legal or tax advice. Laws are subject to change. Please consult our team for situation-specific guidance.