The core trade-off
The new regime offers lower slab rates but removes most deductions. The old regime has higher rates but lets you claim deductions like 80C, 80D, HRA and home-loan interest. The right choice depends on how many deductions you actually use.
New regime at a glance
After a ₹75,000 standard deduction, slabs run from nil (up to ₹3 lakh) to 30% (above ₹15 lakh), and a Section 87A rebate makes tax nil up to ₹7 lakh taxable. It’s simpler and the default. Estimate it with the income tax calculator.
Old regime at a glance
Higher rates, but if you invest in 80C instruments, have an HRA claim, a home loan and health insurance, those deductions can lower your taxable income enough to beat the new regime.
How to decide
Add up the deductions you genuinely claim. If they’re large (big HRA, home-loan interest, full 80C + 80D + NPS), the old regime may win; if few, the new regime’s lower rates usually do. Compute both before choosing — you can pick each year (salaried).
Frequently asked questions
Which is better, the new or old tax regime?
It depends on your deductions. If you claim large deductions (HRA, home-loan interest, 80C, 80D, NPS), the old regime may save more; if few, the new regime’s lower rates usually win. Compare both.
Can I switch between regimes?
Salaried individuals can choose the regime each year. Those with business income have more restrictions on switching.
What deductions are lost in the new regime?
Most, including 80C, 80D, HRA and home-loan interest — the new regime offers lower rates instead. The ₹75,000 standard deduction still applies to salaried individuals.