Every year, millions of Indians face the same question: Should I choose the Old Tax Regime or the New Tax Regime? This article explains both in simple language with real examples and helps you decide which one saves you more money.
| Feature | 🔴 Old Regime | 🟢 New Regime |
|---|---|---|
| Tax Rates | Higher | Lower |
| 80C Deduction (up to ₹1.5L) | ✔ Available | ✘ Not Available |
| HRA Exemption | ✔ Available | ✘ Not Available |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Home Loan Interest (Sec 24b) | ✔ Up to ₹2 Lakh | ✘ Not Available |
| 80D Health Insurance | ✔ Available | ✘ Not Available |
| Zero Tax Limit | Up to ₹5 Lakh | Up to ₹12 Lakh |
| Complexity | More complex | Simpler |
| Default from AY 2025-26? | No — Must opt-in | Yes — Default |
Higher rates, but many deductions allowed to reduce taxable income.
Lower rates, simpler filing, fewer deductions available.
| Old Regime | New Regime | |
|---|---|---|
| Gross Income | ₹8,00,000 | ₹8,00,000 |
| Deductions | ₹2,00,000 (80C + Std.) | ₹75,000 (Std. only) |
| Taxable Income | ₹6,00,000 | ₹7,25,000 |
| Tax Payable | ₹32,500 + 4% cess | ₹0 (87A Rebate!) |
| Old Regime | New Regime | |
|---|---|---|
| Gross Income | ₹15,00,000 | ₹15,00,000 |
| Total Deductions | ₹3,75,000 (80C+HRA+home loan) | ₹75,000 (Std. only) |
| Taxable Income | ₹11,25,000 | ₹14,25,000 |
| Tax Payable | ~₹1,68,000 | ~₹2,02,500 |
Use KotaTaxPro's free Tax Reverse Engine to calculate your exact tax under Old and New Regime in seconds. Enter your income and deductions — get instant results.
Try Free Tax Calculator →Yes, if you are salaried. Salaried employees can switch regime every financial year. Business owners can only switch from New to Old once and cannot switch back.
No. Section 80C (PPF, LIC, ELSS, FD etc.) is not available in the New Regime. However, lower tax rates often compensate for this loss.
From AY 2025-26, New Regime is the default. If you don't explicitly opt for Old Regime, New Regime will apply automatically to your return.
No. HRA exemption is not available in the New Regime. If you pay significant rent, Old Regime may save you more money.
Generally, if your total deductions exceed ₹3.75 lakh, Old Regime is better. This includes 80C + HRA + home loan interest + 80D combined.