📖 6 min read | Tax Planning | April 2026
This is the question every salaried Indian asks between January and March. The answer is not the same for everyone, and anyone who says "always choose new" or "always choose old" without looking at your specific numbers is giving you bad advice.
The new regime now offers a standard deduction of ₹75,000 and has more favourable slabs. Most importantly, if your taxable income after standard deduction is up to ₹12 lakh, your entire tax is wiped out through the Section 87A rebate. This means anyone earning up to roughly ₹12.75 lakh gross salary pays zero tax under the new regime — without needing a single investment or deduction.
The old regime keeps its traditional structure with all the familiar deductions — 80C (₹1.5 lakh), HRA exemption, home loan interest (₹2 lakh under Section 24), NPS (₹50,000 extra), health insurance (₹25,000-50,000 under 80D), and more. But the base tax rates are higher than the new regime.
New regime tends to win when: Your total deductions and exemptions are below ₹3.75 lakh. This is typical for younger employees without a home loan, living with parents (no HRA), and not making heavy 80C investments. The zero-tax threshold up to ₹12.75 lakh gross is a massive advantage that the old regime cannot match for people with low deductions.
Old regime tends to win when: Your total deductions exceed ₹3.75-4 lakh. This is common for people who claim HRA in a metro city (₹1-2 lakh), have a home loan with interest over ₹2 lakh, fully invest in 80C (₹1.5 lakh), and also claim NPS (₹50K), health insurance, and other deductions. The combined deductions can easily cross ₹5-6 lakh, making the old regime significantly cheaper.
Take someone earning ₹18 lakh gross salary in Mumbai. Under the new regime with ₹75K standard deduction, their taxable income is ₹17.25 lakh. Using the new slabs, their tax works out to approximately ₹1.43 lakh (plus cess).
Under the old regime, suppose they claim: 80C ₹1.5 lakh, HRA ₹1.8 lakh, NPS ₹50K, 80D health insurance ₹25K, standard deduction ₹50K. Total deductions: ₹4.55 lakh. Taxable income: ₹13.45 lakh. Using old slabs (5%, 20%, 30%), tax comes to approximately ₹1.59 lakh (plus cess). In this case, the new regime actually wins by about ₹16,000 — even with ₹4.55 lakh in deductions.
But change one variable — add a home loan interest of ₹2 lakh (Section 24). Now old regime deductions total ₹6.55 lakh, taxable income drops to ₹11.45 lakh, and tax is about ₹99,000. Old regime now wins by ₹44,000. The home loan is the tipping point for many people.
Calculate both. There is no shortcut. List every deduction you can legitimately claim, compute tax under both regimes, and pick whichever gives you a lower number. Use the Income Tax Calculator on our site for the new regime, and the official calculator at incometax.gov.in for a detailed old regime calculation.