India now has two income tax regimes. The new regime offers lower tax rates but fewer deductions. The old regime has higher rates but allows deductions under 80C, 80D, HRA and more. The right choice depends on your income and how many deductions you claim.

Tax Slabs Comparison (FY 2025-26)

New Tax Regime

Income Slab	Tax Rate
Up to ₹3 lakh	Nil
₹3-7 lakh	5%
₹7-10 lakh	10%
₹10-12 lakh	15%
₹12-15 lakh	20%
Above ₹15 lakh	30%

Old Tax Regime

Income Slab	Tax Rate
Up to ₹2.5 lakh	Nil
₹2.5-5 lakh	5%
₹5-10 lakh	20%
Above ₹10 lakh	30%

Deductions Available Only in Old Regime

• Section 80C — up to ₹1.5 lakh (PPF, ELSS, LIC, EPF, tuition fees)
• Section 80D — health insurance premium (₹25,000-₹1 lakh)
• HRA exemption — significant for those paying rent in metro cities
• Section 24(b) — home loan interest up to ₹2 lakh
• Section 80E — education loan interest
• Standard deduction — ₹50,000 (available in both regimes now)

When the Old Regime May Save More

If your total deductions exceed ₹3.75-4 lakh (including 80C, 80D, HRA, home loan interest), the old regime often results in lower tax. This is common for salaried employees who:

• Pay rent in metro cities (HRA benefit)
• Have a home loan (₹2 lakh interest deduction)
• Invest ₹1.5 lakh in PPF/ELSS/EPF
• Pay health insurance premiums

When the New Regime May Save More

If your deductions are minimal — say under ₹2.5 lakh — the lower tax slabs in the new regime typically result in lower tax. This is common for:

• Young professionals without home loans or rent
• Those living in own houses (no HRA)
• People who don't make 80C investments beyond EPF

Example Comparison — ₹15 Lakh Income

Scenario	Old Regime Tax	New Regime Tax
No deductions	₹2,62,500	₹1,50,000
₹2 lakh deductions	₹2,00,000	₹1,50,000
₹4 lakh deductions	₹1,42,500	₹1,50,000
₹5 lakh+ deductions	₹1,12,500	₹1,50,000

The crossover point is around ₹3.75-4 lakh in deductions at this income level.

How to Decide

Calculate your total deductions under the old regime. If they exceed the break-even point for your income, the old regime saves more tax. The new regime is the default — you can opt for the old regime when filing your return.

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