Old vs new tax regime
The new regime is the default and has lower slabs, but almost no deductions. Here is the trade-off, with the numbers behind it.
The two slab tables
New regime — the default
| Income slice | Rate |
|---|---|
| ₹0 – ₹400,000 | 0% |
| ₹400,000 – ₹800,000 | 5% |
| ₹800,000 – ₹1,200,000 | 10% |
| ₹1,200,000 – ₹1,600,000 | 15% |
| ₹1,600,000 – ₹2,000,000 | 20% |
| ₹2,000,000 – ₹2,400,000 | 25% |
| Above ₹2,400,000 | 30% |
Standard deduction ₹75,000 · rebate up to ₹60,000 makes taxable income up to ₹1,200,000 tax-free
Old regime — you must opt in
| Income slice | Rate |
|---|---|
| ₹0 – ₹250,000 | 0% |
| ₹250,000 – ₹500,000 | 5% |
| ₹500,000 – ₹1,000,000 | 20% |
| Above ₹1,000,000 | 30% |
Standard deduction ₹50,000 · rebate up to ₹12,500 up to ₹500,000
A worked example
Take a ₹15,00,000 salary. Under the new regime, taxable income after the ₹75,000 standard deduction is ₹14,25,000, and the tax comes to about ₹97,500 including cess.
Under the old regime the same salary needs deductions to compete. With ₹1.5 lakh of 80C, ₹1.5 lakh of HRA exemption, ₹25,000 of 80D and ₹25,000 of home-loan interest — ₹3.5 lakh in total — taxable income falls to ₹11,00,000 and the tax is about ₹1,48,200. The new regime is still ahead by roughly ₹50,000.
The old regime only pulls ahead when the deductions are large: a big HRA claim in a metro city, a large home loan, and the full 80C. For most salaried people without those, the new regime wins despite the higher-sounding deductions.
What the old regime still allows
- HRA exemption, if you pay rent — usually the biggest single item
- 80C up to ₹1.5 lakh: PPF, ELSS, life insurance, principal on a home loan
- 80D health insurance, 24(b) home-loan interest, 80E education-loan interest
- 80CCD(1B) — an extra ₹50,000 for NPS, still available under the new regime too
The salary calculator does this comparison on your actual numbers, including HRA, 80C, 80D and home-loan interest.