Old vs New Tax Regime: Detailed Comparison (FY 2025-26)
Old vs new income tax regime comparison — slabs, deductions, standard deduction, who should choose which. Examples, calculator.
The new tax regime (Section 115BAC) was introduced in 2020 and has been revised multiple times. In FY 2024-25, the slabs are more attractive. In this guide, we compare old vs new regime and help you choose.
Old Tax Regime (FY 2024-25)
Default regime before 2020. Allows 80C, 80D, 80CCD, 24(b), HRA, LTA, etc. Higher tax rates but more deductions.
| Income | Rate |
|---|---|
| Up to ₹2.5L | Nil |
| ₹2.5L-₹5L | 5% |
| ₹5L-₹10L | 20% |
| >₹10L | 30% |
Standard deduction: ₹50,000. Rebate under 87A: up to ₹5L (if total income < ₹5L). Surcharge: 10% (₹50L-1Cr), 15% (₹1-2Cr), etc.
New Tax Regime (FY 2024-25)
Introduced in 2020. Lower tax rates but most deductions are not allowed. Default regime from FY 2023-24.
| Income | Rate |
|---|---|
| Up to ₹3L | Nil |
| ₹3L-₹7L | 5% |
| ₹7L-₹10L | 10% |
| ₹10L-₹12L | 15% |
| ₹12L-₹15L | 20% |
| >₹15L | 30% |
Standard deduction: ₹75,000. Rebate under 87A: up to ₹7L (if total income < ₹7L). Surcharge: same as old. Most other deductions (80C, 80D, 80CCD, 24(b), HRA, LTA) are NOT allowed.
Allowed Deductions
| Deduction | Old Regime | New Regime |
|---|---|---|
| Standard Deduction | ₹50,000 | ₹75,000 |
| 80C (PPF, ELSS, LIC, EPF, home loan principal) | Up to ₹1.5L | Not allowed |
| 80CCD(1B) (NPS) | Up to ₹50K (over 80C) | Not allowed |
| 80CCD(2) (Employer NPS) | Up to 10% of basic (14% for central govt) | Up to 10% of basic (14% for central govt) |
| 80D (Health insurance) | Up to ₹25K-₹1L | Not allowed |
| 80E (Education loan interest) | No limit (8 years) | Not allowed |
| 80G (Donations) | 50-100% of donation | Not allowed |
| 80TTA (Savings interest) | Up to ₹10K | Not allowed |
| 24(b) (Home loan interest) | Up to ₹2L (self-occupied) | Not allowed |
| HRA exemption | Yes (min of 3 conditions) | Not allowed (only if you opt for old) |
| LTA | Yes (2 trips in 4 years) | Not allowed |
| Conveyance / Transport | ₹19,200/year | Not allowed |
| Medical | ₹15,000/year | Not allowed |
Comparison Examples
| Income | Old Regime Tax | New Regime Tax | Savings |
|---|---|---|---|
| ₹5L (no deductions) | Nil (87A rebate) | Nil (87A rebate) | Same |
| ₹7L (no deductions) | ₹25,000 | Nil (87A rebate) | New saves ₹25K |
| ₹10L (₹1.5L 80C + ₹25K 80D) | ₹75,000 | ₹58,500 | New saves ₹16.5K |
| ₹15L (₹1.5L 80C + ₹25K 80D + HRA) | ₹1,95,000 | ₹1,80,000 | New saves ₹15K |
| ₹25L (₹2L home loan interest) | ₹4,95,000 | ₹5,20,000 | Old saves ₹25K |
| ₹50L (heavy deductions) | ₹12,45,000 | ₹12,90,000 | Old saves ₹45K |
How to Choose
- For income < ₹7L with minimal deductions: New regime (lower tax, ₹0 with 87A rebate)
- For income ₹7L-₹15L with moderate deductions: Compare both (usually close)
- For income > ₹15L with heavy deductions (HRA, 80C, 80D, home loan): Old regime (more deductions)
- For senior citizens (without business income): Old regime is usually better (no 80TTB in new)
- For NRI: Both regimes work. Choose based on deductions.
How to Switch
- Salaried employees: can switch between old and new regime every year at the time of declaring investment proofs to employer
- Business / profession: only at the time of filing ITR (one-time per year)
- No form required, just specify the regime in Form 10-IE (for business) or Form 12BB (for salary)
Frequently Asked Questions
Q: Which regime is better for ₹10 LPA?
A: Depends on deductions. For someone with 80C + 80D + HRA: new regime saves ₹15-20K. For someone with no deductions + HRA: new regime saves ₹30K+. Use our Income Tax Calculator.
Q: Can I switch regimes every year?
A: Salaried: yes, every year. Business: only at the time of ITR filing. Note: once you opt for new regime as a business, you cannot switch back.
Q: Is new regime default?
A: Yes, since FY 2023-24, new regime is the default for all taxpayers. You can opt out of new regime by declaring it in Form 10-IE (for business) or Form 12BB (for salary).
Q: What is the rebate limit under 87A?
A: New regime: ₹25,000 rebate if total income < ₹7L (effective no tax up to ₹7L). Old regime: ₹12,500 rebate if total income < ₹5L (effective no tax up to ₹5L).