Tax Regime Calculator
Compare New vs Old Tax Regime for FY 2025-26. Find out which tax regime saves you more money based on your income and deductions.
1Your Income
2Your Deductions
Reduces tax in both regimes
Reduces tax in old regime only
3Tax Comparison
How to Use the Tax Regime Calculator
The income tax calculator new regime and income tax calculator old regime functions on this page run side by side. The new tax regime calculator 2025-26; the difference is the year-anchored framing of the search query.
Enter your annual CTC (gross salary)
This is your full Cost-To-Company. Include base, allowances, special pay, and employer contributions. The calculator uses CTC as the starting point because that's the number you actually know.
Enter deductions that reduce tax in both regimes
Two items: employer NPS contribution (Section 80CCD(2)) and employer PF contribution. Both apply to old and new regimes alike.
Enter deductions that apply to the old regime only
Six inputs: HRA exemption (use the linked HRA calculator if unsure), 80C investments (cap ₹1.5L), 80CCD(1B) voluntary NPS (cap ₹50k), 80D health insurance (cap ₹25k–₹75k), 24(b) home loan interest (cap ₹2L on self-occupied), and 80G donations. The calculator applies these only to the old-regime side.
Read the side-by-side tax output
Tax under new tax regime; slab tax plus 4% cess, minus Section 87A rebate (₹60,000 cap) and marginal relief where applicable. Tax under old tax regime, slab tax plus cess, minus 87A rebate (₹12,500 cap).
Read the savings and breakeven
The bottom panel shows which regime wins and by how much, plus the breakeven deduction amount - the exact rupee figure at which old equals new. Below breakeven, new wins. Above breakeven, old wins.
What is the New Tax Regime?
The new income tax regime, introduced under Section 115BAC of the Income Tax Act in Budget 2020 and made the default from FY 2023-24 onwards, is a simplified tax structure with lower slab rates but very limited deductions. Are you opting for new tax regime u/s 115BAC means you accept lower headline tax rates in exchange for giving up most exemptions; including HRA, LTA, 80C, 80D, 80CCD(1B), and home loan interest claims under Section 24(b).
Tax new regime defaults switched permanently in FY 2023-24. Before that, taxpayers had to actively opt in. From FY 2023-24 onwards, the new tax regime is the default; you now have to actively opt out to continue using the old regime. The new tax regime news every year since Budget 2020 has pushed the system further in favour of the new regime; Budget 2024 raised the standard deduction in new tax regime to ₹75,000, and Budget 2025 raised both the basic exemption to ₹4 lakh and the Section 87A rebate to ₹60,000.
Key Features of the New Tax Regime FY 2025-26
- Basic exemption raised to ₹4 lakh (up from ₹3 lakh in FY 2024-25).
- Section 87A rebate raised to ₹60,000 up from ₹25,000 for taxable income up to ₹12 lakh. This means a salaried taxpayer earning up to ₹12.75 lakh CTC pays zero tax in the new regime after the ₹75,000 standard deduction.
- New 25% slab introduced between ₹20 lakh and ₹24 lakh softening the previously vertical jump from 20% to 30%.
- Marginal relief continues to apply at the ₹12 lakh threshold, capping the cliff effect on incomes just above ₹12 lakh.
- Maximum surcharge capped at 25% (vs 37% under the old regime) a separate reason why ultra-HNI taxpayers default to new.
New Tax Regime Slabs for FY 2025-26
The new tax regime slabs for FY 2025-26 (AY 2026-27) follow a seven-band progression.
| Taxable Income Range | Tax Rate | Notes |
| Up to ₹4,00,000 | Nil | Basic exemption; no tax |
| ₹4,00,001 - ₹8,00,000 | 5% | First chargeable slab |
| ₹8,00,001 - ₹12,00,000 | 10% | Within the ₹12 lakh rebate ceiling |
| ₹12,00,001- ₹16,00,000 | 15% | Past the 87A rebate cliff |
| ₹16,00,001 - ₹20,00,000 | 20% | Mid-bracket |
| ₹20,00,001 - ₹24,00,000 | 25% | New slab added in Budget 2025 |
| Above ₹24,00,000 | 30% | Top slab |
Plus 4% Health and Education Cess on tax payable. New tax regime income tax slabs and income tax slabs new tax regime both refer to the table above. Tax slabs in new regime and income tax new regime slabs are the same set each year-anchored framing (FY 2025-26, AY 2026-27, etc.) just labels the same underlying structure. Standard deduction in new tax regime of ₹75,000 is applied first, before slab-wise tax is computed; so a salaried taxpayer with ₹12.75 lakh CTC reaches the ₹12 lakh taxable threshold and gets the full Section 87A rebate.
Historical New Tax Regime Slabs (FY 2024-25 and earlier)
If you're filing a delayed return for an earlier year, the new tax regime slabs 2024-25 (also referenced as new regime tax slab 2024-25, new tax regime slabs fy 2024-25, new regime tax slab for fy 2024-25, new tax regime slabs 2024 25, new regime tax slab 2024 25) were: Nil up to ₹3L, 5% to ₹7L, 10% to ₹10L, 15% to ₹12L, 20% to ₹15L, 30% above ₹15L. The new tax regime slabs 2023-24 (new regime tax slab 2023-24) had similar structure with ₹3L basic exemption.
How is Tax Calculated Under the New Tax Regime?
New regime tax calculation, also called tax calculation as per new regime, tax calculation new tax regime, tax calculation in new regime, tax calculation under new regime, or income tax calculation new regime, follows a fixed five-step sequence.
Step-by-Step: How to Calculate Income Tax in New Regime
Step 1: Compute gross salary by adding base pay, allowances, bonuses, and benefits.
Step 2: Deduct standard deduction of ₹75,000 and employer NPS contribution (under Section 80CCD(2)) and any employer PF contribution. These are the only two meaningful deductions allowed under the new regime.
Step 3: Apply slab-wise tax rates to arrive at gross tax liability before rebate.
Step 4: Apply Section 87A rebate (up to ₹60,000) if taxable income is at or below ₹12 lakh. Apply marginal relief if income is just above ₹12 lakh.
Step 5: Add 4% Health and Education Cess on the post-rebate tax. This is your final liability.
Worked Example: Calculate Tax as per New Regime
Suppose your CTC is ₹15,00,000 with no employer NPS or PF contribution. To calculate tax in new regime, calculate income tax new regime, calculate tax under new regime, or calculate tax new regime; the math runs as follows:
Gross salary: ₹15,00,000 Less: Standard deduction: ₹75,000 Taxable income: ₹14,25,000
Slab-wise tax:
- Up to ₹4L: ₹0
- ₹4L–₹8L @ 5%: ₹20,000
- ₹8L–₹12L @ 10%: ₹40,000
- ₹12L–₹14.25L @ 15%: ₹33,750
Total tax before rebate: ₹93,750
Section 87A rebate: Not applicable (taxable income > ₹12 lakh)
Tax + 4% cess: ₹93,750 + ₹3,750 = ₹97,500
How is Section 87A Rebate Calculated in New Tax Regime?
The 87A rebate in new tax regime is the largest single tax break in the new regime. The rebate under new tax regime works on a simple rule: if your taxable income (after standard deduction and other allowed deductions) is at or below ₹12 lakh, you get a rebate equal to the lower of your computed tax or ₹60,000.
Example A: Taxable income ₹10 lakh. Slab tax = ₹50,000. Rebate = ₹50,000 (full tax rebated). Net tax = ₹0.
Example B: Taxable income ₹12 lakh. Slab tax = ₹60,000. Rebate = ₹60,000. Net tax = ₹0.
Example C: Taxable income ₹12.01 lakh. Slab tax would be ₹60,150. Rebate doesn't apply because income exceeds ₹12 lakh; but marginal relief steps in here.
Marginal Relief in New Tax Regime
Without marginal relief in new tax regime, an income of ₹12.01 lakh would trigger ₹62,556 in tax (including cess); a sudden cliff for just ₹1,000 of additional income. Marginal relief caps this so that the additional tax cannot exceed the additional income above ₹12 lakh. At ₹12.10 lakh income, the maximum tax payable is approximately ₹10,400 closely matching the additional ₹10,000 earned above the threshold. The calculator applies marginal relief automatically across the ₹12 lakh – ₹12.75 lakh band.
Deductions and Exemptions in the New Tax Regime
Deductions in new tax regime are deliberately limited; that's the trade-off for the lower slab rates. Deduction in new tax regime, deduction under new tax regime, new tax regime deductions, deduction allowed in new tax regime, deductions allowed in new tax regime, and deduction available in new tax regime all refer to the same short list below.
What's Allowed in the New Tax Regime
Standard deduction of ₹75,000: for salaried taxpayers and pensioners (₹50,000 in FY 2023-24). The new tax regime standard deduction is the single largest deduction available.
Employer NPS contribution under Section 80CCD(2): up to 14% of basic salary for central/state government employees, 14% for private-sector employees. NPS deduction in new tax regime is limited to this employer-side contribution.
- Employer PF contribution: the employer's 12% PF contribution is excluded from taxable salary.
- Family pension deduction: ₹25,000 (raised from ₹15,000 in FY 2023-24) for family pensioners.
- Agniveer Corpus Fund contributions: under Section 80CCH for armed forces.
- Section 24(b) home loan interest: ONLY for let-out properties. Self-occupied home loan interest is NOT deductible under the new regime.
What's NOT Allowed in the New Tax Regime
Exemption under new tax regime is significantly narrower than the old regime. Tax exemption in new tax regime explicitly excludes:
- HRA exemption under Section 10(13A). The HRA in new tax regime is fully taxable. HRA exemption in new tax regime is unavailable.
- LTA exemption (LTA in new tax regime is unavailable).
- Section 80C deductions:- PPF, ELSS, life insurance premium, principal home loan repayment, etc. 80C in new tax regime is unavailable.
- Section 80CCD(1B) voluntary NPS:- the ₹50,000 self-contribution is not deductible. 80CCD 1B in new tax regime is unavailable.
- Section 80D health insurance premiums.
- Section 80TTA savings account interest exemption. Is 80TTA applicable in new tax regime? No. 80TTA in new tax regime is unavailable.
- Section 80TTB senior citizen interest deduction. Is 80TTB applicable in new tax regime? No. 80TTB in new tax regime is unavailable.
- Section 80G donations.
- Section 24(b) home loan interest on self-occupied property.
- Most other Chapter VI-A deductions (80E, 80EE, 80EEA, 80GG, etc.).
The new tax regime exemption list above is exhaustive; anything not listed in the 'allowed' section is unavailable. The new tax regime exemption list 2023-24 was even narrower; Budget 2024 added the family pension deduction and Budget 2025 expanded the standard deduction.
How to Save Tax in New Tax Regime
How to save tax in new tax regime is narrower than in the old regime. The realistic levers:
- Maximise employer NPS contribution (up to 14% of basic); this is the single largest available deduction.
- Negotiate higher employer PF contribution if your salary structure allows it.
- Time capital gains harvesting and rebalancing across financial years to manage taxable income near the ₹12 lakh rebate threshold.
- For business owners, consider salary-vs-dividend split structures that route income through Section 115BAC efficiently.
New Tax Regime for Senior Citizens
New tax regime for senior citizens has the same slab structure as for other taxpayers. There is no separate higher basic exemption for senior or super-senior citizens in the new regime. This is a material disadvantage versus the old regime, which gives senior citizens (60+) a ₹3 lakh basic exemption and super-senior citizens (80+) a ₹5 lakh basic exemption. Senior citizens with primarily interest income from FDs and senior citizen savings schemes typically benefit from the old regime's 80TTB ₹50,000 deduction, which is unavailable in the new regime.
Opting Out of New Tax Regime
Opting out of new tax regime requires filing Form 10-IEA along with your ITR if you have business or professional income. Salaried taxpayers without business income can switch between regimes every year directly through the ITR form — no Form 10-IEA needed. Once you opt out of the new regime with business income, you can switch back only once in your lifetime.
Old Tax Regime: Slabs, Deductions, and When It Wins
The old tax regime keeps the traditional flat-progressive structure that existed before Section 115BAC. Old income tax regime, tax old regime, and old regime tax all refer to the same Chapter VI-A-rich framework.
Income tax old regime applies these slabs alongside the deductions listed in the next section. Standard deduction for old tax regime is ₹50,000; the standard deduction in old tax regime is mandatory and applied before slab tax is computed.
| Taxable Income Range | Tax Rate | Notes (FY 2025-26) |
| Up to ₹2,50,000 | Nil | Basic exemption (₹3L for senior, ₹5L for super-senior) |
| ₹2,50,001 - ₹5,00,000 | 5% | Eligible for ₹12,500 Section 87A rebate |
| ₹5,00,001 - ₹10,00,000 | 20% | Mid-income |
| Above ₹10,00,000 | 30% | Top slab; starts much earlier than new regime |
Old tax regime slabs 2024-25 are identical to FY 2025-26 — there have been no slab changes in the old regime since FY 2017-18. Income tax slab for ay 2024-25 old regime and income tax slab for fy 2024-25 old regime match the table above. The old regime continues to apply a 4% Health and Education Cess on tax payable, plus surcharge of 10% to 37% on incomes above ₹50 lakh.
Old Tax Regime Deductions
Old tax regime deductions are the regime's main advantage; and the reason high-deduction filers stay on the old regime. The full deduction stack:
- Standard deduction in old tax regime: ₹50,000 for salaried (lower than ₹75,000 in new). Is standard deduction applicable in old tax regime? Yes- ₹50,000.
- HRA exemption in old tax regime under Section 10(13A) typically: ₹60,000–₹3 lakh for metro renters.
- LTA exemption: twice in every block of four years.
- Section 80C: up to ₹1.5 lakh (PPF, ELSS, life insurance premium, principal home loan repayment, etc.).
- Section 80CCD(1B) voluntary NPS: additional ₹50,000.
- Section 80D health insurance: ₹25,000 (self/family) plus ₹50,000 (parents 60+).
- Section 24(b) home loan interest: up to ₹2 lakh on self-occupied property.
- Section 80TTA / 80TTB savings and FD interest deductions.
- Section 80G donations.
- NPS deduction in old tax regime under 80CCD(1) and 80CCD(2): fully available.
- Other Chapter VI-A deductions (80E education loan, 80EE/80EEA first-home loan interest, 80GGC political donations, etc.).
87A Rebate in Old Tax Regime
87A rebate in old tax regime is still capped at ₹12,500 for taxable income up to ₹5 lakh. This is unchanged since FY 2019-20. The contrast with the new regime's ₹60,000 rebate on incomes up to ₹12 lakh is one of the most material differences between the two regimes.
Tax Calculation as per Old Regime
Tax calculation as per old regime and tax calculation old regime follow the same five-step process as the new regime; gross salary, less allowed deductions and exemptions, apply slabs, apply 87A rebate (if eligible), add cess.
Worked example:- Tax on 8 lakh income old tax regime, with ₹1.5 lakh in 80C, ₹25,000 in 80D, and ₹50,000 standard deduction:
Gross income: ₹8,00,000
Less: Standard deduction ₹50,000 + 80C ₹1,50,000 + 80D ₹25,000 = ₹2,25,000
Taxable income: ₹5,75,000
Slab tax: ₹12,500 + 20% × ₹75,000 = ₹27,500
Less: 87A rebate (not applicable, income > ₹5L): ₹0
Tax + 4% cess: ₹27,500 × 1.04 = ₹28,600
Budget 2025 and the Future of the Old Regime
Old tax regime budget 2025 saw no slab changes; the government has effectively frozen the old regime, redirecting all incentive design toward the new regime. Budget 2024 old tax regime kept slabs and rebate identical. Will old tax regime be discontinued? There's no formal announcement, but the policy direction has been clear since FY 2023-24: the new regime is the default, and the old regime is being allowed to fade. Any changes in old tax regime over the last three Budgets have been zero on the slab/rebate side; the old regime is structurally unchanged from FY 2020-21. Old tax regime 2025 (also old tax regime 2024-25, old tax regime 2023-24, old tax regime 2023 24) retains the same structure.
Old vs New Tax Regime: Side-by-Side Comparison
The old vs new tax regime calculator on this page surfaces a comparison most other calculators stop short of; the breakeven deduction, all answer the same fundamental question: which regime wins for your specific income and deductions, and how far away are you from the alternative?
| Feature | Old Tax Regime | New Tax Regime (Section 115BAC) |
| Basic exemption | ₹2.5L (₹3L senior, ₹5L super-senior) | ₹4 lakh (uniform- no senior bonus) |
| Slab rates | 5% / 20% / 30% - 4 bands | 5% / 10% / 15% / 20% / 25% / 30% - 7 bands |
| Standard deduction | ₹50,000 | ₹75,000 |
| Section 87A rebate | ₹12,500 (up to ₹5L taxable) | ₹60,000 (up to ₹12L taxable) |
| 80C deductions | ₹1.5L cap | Not available |
| HRA exemption | Available | Not available |
| NPS 80CCD(1B) | ₹50k additional | Not available |
| Home loan 24(b) interest | ₹2L on self-occupied | Only let-out property |
| 80TTA / 80TTB | Available | Not available |
| Maximum surcharge | 37% | 25% |
| Default for FY 2025-26 | Must opt out via ITR/Form 10-IEA | Default: applies unless you opt out |
The Breakeven Concept
Most tax calculators tell you which regime wins. This one tells you the exact deduction level at which the answer would flip. New tax regime comparison usually starts with which regime is better at your CTC, but the more useful question is, at what total deductions does the alternative start winning?
For a salaried filer with ₹15 lakh CTC, the new regime tax is ₹97,500 (with ₹75k standard deduction, no other deductions). The old regime tax with ₹2.25 lakh in deductions (80C + NPS + 80D) is ₹1,86,720. New regime saves ₹89,720. The breakeven; the point at which both regimes produce identical tax is approximately ₹5.44 lakh of total deductions. Below ₹5.44 lakh in deductions, new wins. Above it, old wins.
The breakeven moves with your CTC. At ₹10 lakh CTC, the breakeven is closer to ₹2 lakh. At ₹25 lakh CTC, it's closer to ₹6.5 lakh. Knowing the exact number for your CTC is the single most useful output of this calculator.
Which Tax Regime Suits You? Get a Personalised Review
A tax regime calculator tells you which regime wins at this year's deduction level. It doesn't tell you whether your salary structure is itself optimised, whether you should reorganise your investments to push past the breakeven, or whether a home loan over the next two years would change the equation. Those decisions need your full financial picture; portfolio, goals, liabilities, life stage.
Get a personalised tax-aware allocation review on the Novelty Wealth app. NovaAI looks at your actual portfolio, income, and goals tells you precisely how to optimise your salary structure, regime choice, and deductions. Built by a SEBI Registered Investment Advisor team, not by a tax software company.
How to Switch Between Tax Regimes in ITR
Salaried taxpayers without business income can switch tax regime every year directly through the ITR form. Can I switch to old tax regime is a Yes for most salaried filers. How to opt for old tax regime, how to select old tax regime, how to select old tax regime in itr, how to select old tax regime while filing itr, how to choose old tax regime, and how to change to old tax regime while filing itr; all reference the same workflow.
For Salaried Taxpayers (No Business Income)
- Open your ITR-1 or ITR-2 form on the income tax e-filing portal.
- Under 'Personal Information', the regime selector asks whether you want to opt out of the new tax regime under Section 115BAC(6).
- Select 'Yes' to use the old regime. The rest of the form will then accept all old-regime deductions (HRA, 80C, 80D, etc.).
- File the return. You can change this choice every year, no permanent commitment.
For Business or Professional Income
- File Form 10-IEA to opt out of the new regime. This must be done before filing the ITR for the relevant assessment year, and before the due date under Section 139(1).
- Once you opt out, you can switch back to the new regime only once in your lifetime. Plan this carefully.
- How to file income tax return in old regime with business income requires both Form 10-IEA and the appropriate ITR form (ITR-3 / ITR-4 typically).
Key Things to Know About Tax Regimes
| Details | What You Need to Know |
| FY vs AY | FY 2025-26 corresponds to AY 2026-27. Tax returns for income earned in FY 2025-26 are filed under AY 2026-27. |
| Default regime | From FY 2023-24 onwards, the new tax regime is the default. You must actively opt out to use the old regime. |
| Zero-tax income (new) | Salaried taxpayers earning up to ₹12.75 lakh CTC pay zero tax in the new regime, thanks to ₹75,000 standard deduction + ₹60,000 Section 87A rebate. |
| Zero-tax income (old) | Old regime zero-tax kicks in at ₹5 lakh taxable income (with ₹12,500 rebate). After standard deduction of ₹50,000 and 80C of ₹1.5L, gross income of ~₹7L can reach zero tax. |
| Senior citizens | Old regime gives seniors a ₹3L (60+) or ₹5L (80+) basic exemption and 80TTB ₹50k deduction. New regime treats seniors the same as everyone else; no extra benefit. |
| Surcharge cap | New regime caps surcharge at 25% (vs 37% in old). Material for incomes above ₹2 crore. |
| Marginal relief | Applies in both regimes around slab transitions. New regime additionally has marginal relief at the ₹12 lakh rebate threshold. |
| Form 10-IEA | Required only for business/professional income filers opting out of the new regime. Salaried filers without business income don't need it. |
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Get Your Tax-Aware Allocation Review on NovaAIFrequently Asked Questions about Tax Regimes
It depends on your total deductions versus your CTC. For FY 2025-26, salaried taxpayers earning up to ₹12.75 lakh CTC pay zero tax in the new regime, making it the obvious choice. For incomes between ₹12.75 lakh and ₹25 lakh, the new regime usually wins unless total deductions exceed ₹4–6 lakh realistic only for filers with substantial home loan interest plus maxed-out 80C, NPS, HRA, and 80D. For incomes above ₹25 lakh, the old regime can still win for high-deduction stackers but the surcharge cap difference (25% new vs 37% old) often offsets the deduction advantage. Use the calculator above with your specific numbers.
Section 87A rebate in the new tax regime works as follows: if your taxable income (after standard deduction and any allowed deductions) is at or below ₹12 lakh, you get a rebate equal to the lower of your computed slab tax or ₹60,000. So if your slab tax is ₹50,000, the full ₹50,000 is rebated (net tax = ₹0). If your slab tax is ₹70,000, only ₹60,000 is rebated and you pay ₹10,000 plus 4% cess. This is up from ₹25,000 rebate / ₹7 lakh threshold in FY 2024-25 the biggest single rebate enhancement in the new regime's history.
Marginal relief in new tax regime prevents a steep tax cliff just above the ₹12 lakh threshold. Without it, ₹12.01 lakh taxable income would trigger ~₹62,556 in tax because Section 87A rebate doesn't apply above ₹12 lakh. Marginal relief caps the additional tax at the additional income so at ₹12.10 lakh, maximum tax payable is approximately ₹10,400. The calculator applies marginal relief automatically across the ₹12 lakh – ₹12.75 lakh band.
The new tax regime standard deduction is ₹75,000 for salaried taxpayers and pensioners for FY 2025-26, up from ₹50,000 in FY 2023-24. Family pensioners get ₹25,000 (up from ₹15,000). Standard deduction in old tax regime is ₹50,000 for salaried and ₹15,000 for family pensioners unchanged for several years. Is standard deduction applicable in old tax regime? Yes, but at the lower ₹50,000 figure.
Deductions allowed in new tax regime are limited to: standard deduction ₹75,000 (salaried/pensioners), employer NPS contribution under Section 80CCD(2) (up to 14% of basic), employer PF contribution, family pension deduction ₹25,000, Agniveer Corpus Fund contribution, and Section 24(b) home loan interest on let-out property only. Everything else; 80C, 80D, 80CCD(1B), HRA, LTA, 80TTA, 80TTB, 80G, self-occupied home loan interest is unavailable. NPS deduction in new tax regime is limited to the employer contribution.
No. HRA in new tax regime is fully taxable as salary income; there is no Section 10(13A) exemption available. HRA exemption in new tax regime is unavailable. This is one of the largest single losses when moving from the old regime to the new regime. For metro-city renters in the 30% slab paying ₹25,000+ in monthly rent, the lost HRA exemption alone can be worth ₹60,000–₹1.5 lakh in annual tax savings which is why such taxpayers usually stay on the old regime.
No. 80C in new tax regime is unavailable. This means PPF, ELSS, life insurance premium, principal home loan repayment, NSC, ULIP, and other 80C-qualifying investments don't reduce taxable income in the new regime. They can still be made; they just don't trigger any tax deduction. Most filers continuing 80C investments under the new regime do so for the underlying product benefits (ELSS for equity, PPF for fixed-income), not for the tax deduction.
No. Is 80TTA applicable in new tax regime? No. Is 80TTB applicable in new tax regime? No. The ₹10,000 savings account interest deduction under 80TTA, and the ₹50,000 senior citizen interest deduction under 80TTB, are both unavailable under Section 115BAC. Interest income from savings, FDs, and bonds is fully taxable in the new regime.
No. LTA in new tax regime is unavailable. Leave Travel Allowance exemption under Section 10(5) only applies under the old regime. Employees with significant LTA in their salary structure should evaluate the regime decision carefully; the LTA loss can be material.
Partially. NPS in new tax regime and NPS new tax regime: only the employer contribution under Section 80CCD(2) is deductible; up to 14% of basic salary (raised from 10% by Budget 2024). The voluntary ₹50,000 contribution under 80CCD(1B) is NOT available. So if your employer doesn't offer NPS, you get no NPS-related deduction in the new regime.
Salaried taxpayers without business income can switch every year directly in the ITR form. Open the regime selector under Personal Information in ITR-1 or ITR-2 and choose 'Yes' to opt out of Section 115BAC. For business/professional income filers, file Form 10-IEA before the ITR due date; once opted out, switching back to new is allowed only once in your lifetime. There's no separate switching form for salaried filers.
There's no formal announcement that the old tax regime will be discontinued. However, the policy direction since FY 2023-24 has been clear the new regime is the default and gets all the budget incentives, while the old regime has been frozen with zero structural changes since FY 2020-21. Any changes in old tax regime over the last three Budgets have been zero. Most tax practitioners expect the old regime to remain available for at least the medium term, but eventually phase out. Filers building long-term tax strategies should plan for the new regime as the default and treat the old regime as a tactical option.
Tax on ₹8 lakh income old tax regime with typical deductions:
Gross ₹8L − Standard deduction ₹50k − 80C ₹1.5L − 80D ₹25k = ₹5.75L taxable. Slab tax = ₹12,500 (on ₹2.5L–₹5L band) + 20% × ₹75k (on ₹5L–₹5.75L band) = ₹27,500. Section 87A rebate doesn't apply (taxable income > ₹5L). Tax + 4% cess = ₹28,600.
In the new regime with the same ₹8L CTC and only the ₹75k standard deduction, taxable income = ₹7.25L, slab tax = ₹20,000 + 10% × ₹0 = ₹20,000, Section 87A rebate = ₹20,000 (full rebate), net tax = ₹0. New regime wins clearly at this income level.