The regime you pick is the single biggest tax decision a salaried or individual taxpayer makes each year — and most people get it wrong by accepting a default. Here's how to choose deliberately.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-15
Quick answer
A clear decision guide to choosing between the old and new tax regimes — the trade-off, who each suits, and how to actually run the comparison before you file.
The new regime offers lower slab rates, a Rs 75,000 standard deduction, and nil tax up to Rs 12,00,000 of income — but it strips out almost every deduction (80C, HRA, home-loan interest, and so on). The old regime keeps all those deductions and a Rs 50,000 standard deduction, but charges higher rates and spares tax only up to Rs 5,00,000. So it's "low rates, no deductions" versus "higher rates, full deductions."
| Feature | New regime | Old regime |
|---|---|---|
| Standard deduction | Rs 75,000 | Rs 50,000 |
| Tax-free up to (rebate) | Rs 12,00,000 | Rs 5,00,000 |
| 80C (PPF, ELSS, insurance) | Not available | Up to Rs 1,50,000 |
| 80CCD(1B) NPS | Not available | Up to Rs 50,000 |
| 80CCD(2) employer NPS | Available | Available |
| HRA exemption | Not available | Available |
| Home-loan interest (24b) | Not available | Up to Rs 2,00,000 |
| 80D health insurance | Not available | Up to Rs 25,000 / 50,000 |
| Slab rates | Lower | Higher |
If you don't have rent, a home loan or large 80C investments, there's nothing for the old regime's deductions to bite on — so its higher rates just cost you more. For a taxpayer with few claims, the new regime's lower rates and the nil-tax-to-Rs-12,00,000 rebate almost always come out ahead, with far less paperwork.
HRA on real rent, Rs 2,00,000 of home-loan interest, a full Rs 1,50,000 under 80C, health insurance and NPS can together knock a large slice off taxable income. When those deductions are big enough, the old regime's higher rates apply to a much smaller base — and it wins. The more you genuinely claim, the more likely old is better.
Switching to the new regime doesn't mean zero deductions. The standard deduction of Rs 75,000 still applies to salary, and employer NPS under 80CCD(2) — up to 14% of salary — is still allowed. If your employer offers NPS, the new regime can be both simpler and competitive.
The only reliable way to choose is to compute tax both ways for your actual income and claims, then pick the lower one. Your employer asks for a regime declaration early in the year, but the final choice (for most individuals without business income) can be made at filing. Use a calculator or your CA, and re-check each year as your claims change.
No — it depends on how much you claim. With few deductions, the new regime's lower rates and nil-tax-to-Rs-12,00,000 usually win; with large deductions (rent, home loan, 80C), the old regime can still be lower. Compare both for your numbers.
Mainly the standard deduction and employer NPS. The Rs 75,000 salary standard deduction applies, and employer contribution to NPS under 80CCD(2) — up to 14% of salary — is allowed. Most other deductions are not.
For most salaried individuals, yes. You can generally choose at filing each year; those with business income face tighter switching rules. Re-check the choice annually as your income and claims change.
Not sure which regime fits your numbers? Write to the firm and we'll run the comparison for you.