Income tax
Old vs New Tax Regime for AY 2026–27
Compare the two income-tax regimes using taxable income, deductions and a repeatable decision process instead of choosing from salary alone.
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The practical difference
The new regime uses wider, more gradual slabs and a ₹75,000 standard deduction for eligible salaried taxpayers, but it does not allow many deductions commonly claimed in the old regime. The old regime uses older slabs and a ₹50,000 standard deduction while retaining several eligible exemptions and deductions.
When the new regime can be lower
The new regime often becomes competitive when a taxpayer has limited old-regime deductions, does not claim a large HRA exemption, or prefers a simpler calculation. Lower slab rates do not automatically make it best for every person, but they reduce the value required from deductions before the old regime catches up.
When the old regime can be lower
The old regime deserves a full calculation when the taxpayer has eligible HRA exemption, home-loan interest or substantial deductions such as Sections 80C and 80D. A deduction is not a rupee-for-rupee refund: it reduces taxable income, and the tax saving depends on the applicable marginal rate.
A four-step comparison
First, calculate gross income and identify income taxed at special rates. Second, subtract only deductions and exemptions genuinely available in each regime. Third, calculate slab tax, rebate, surcharge if applicable and 4% health and education cess. Fourth, compare the final liability and review non-tax considerations such as liquidity and whether an investment was made only to claim a deduction.
Example
A salaried person earning ₹15 lakh cannot decide from salary alone. Under the new regime, the standard deduction changes taxable salary. Under the old regime, HRA, home-loan interest and eligible Chapter VI-A deductions may change it further. Entering the same deductions into both columns would produce a misleading result because several old-regime deductions are not available under the new regime.
Sources and verification
Use these references to verify this income tax guide. Check the document date, relevant period and any conditions before relying on a figure or rule.
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