Old vs New Tax Regime Calculator India — FY 2026-27 Side-by-Side Comparison
For FY 2026-27 (AY 2027-28), the new regime is the default — and for the first time, it genuinely beats the old regime for most salaried Indians at most income levels. The revised new regime slabs are far more compressed: 10% on ₹8–12L, 15% on ₹12–16L, 20% on ₹16–20L, 25% on ₹20–24L. The Section 87A rebate makes tax exactly ₹0 for income up to ₹12 lakh — and with the ₹75,000 standard deduction, salaried employees are tax-free up to ₹12.75L. Under the old regime, reaching zero tax at ₹12L requires stacking ₹4.5L+ in deductions (80C + HRA + 80D etc.) to bring taxable income below the ₹5L rebate threshold — which most people cannot achieve. The standard deduction in the new regime (₹75,000) is also ₹25,000 higher than the old regime (₹50,000), another marginal edge for new regime.
The old regime wins only in specific circumstances: income in the ₹13L–₹20L range combined with a large deduction stack including home loan interest under Section 24(b) (up to ₹2L), HRA exemption (₹1.2–1.8L for metro cities), full Section 80C (₹1.5L), NPS via 80CCD(1B) (₹50K), and Section 80D (₹25–50K). With all five stacked, total deductions can reach ₹5.5–6.5L — at ₹16L income, this pulls taxable income to ≈₹9.5L under the old regime, yielding tax of approximately ₹1,06,600 vs ₹1,13,100 under the new regime. But this ₹6,500 saving requires simultaneously having a home loan, metro city HRA, and senior citizen parents — conditions not everyone meets. Enter your exact numbers above; the crossover is narrow and income-sensitive.
How the New and Old Regime Tax Calculations Work — Slabs, Rebates, and Standard Deduction for FY 2026-27
New Regime (default from FY 2024-25) — FY 2026-27 slabs:
| Taxable Income | Tax Rate |
|---|---|
| ₹0 – ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction: ₹75,000. Section 87A rebate: income up to ₹12,00,000 → rebate of ₹60,000 (effectively zero tax on incomes up to ₹12L). For salaried employees: with ₹75,000 SD, gross salary up to ₹12,75,000 results in zero tax. No 80C, 80D, HRA, or home loan interest deductions allowed — except employer NPS contribution under Section 80CCD(2). Surcharge: maximum 25% (new regime). Cess: 4% on tax + surcharge.
Old Regime — FY 2026-27 slabs:
| Taxable Income | Tax Rate |
|---|---|
| ₹0 – ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard deduction: ₹50,000. Section 87A rebate: net taxable income up to ₹5,00,000 → rebate of up to ₹12,500. Available deductions: Section 80C (₹1.5L), 80D (₹25K self/family, ₹50K if senior), Section 24(b) home loan interest (₹2L, self-occupied), 80CCD(1B) NPS (₹50K), HRA exemption, LTA, and other Chapter VI-A deductions. Surcharge: up to 37% (old regime — higher surcharge makes old regime worse at very high incomes). Cess: 4%.
How to compute tax in new regime — worked example at ₹15L gross salary: SD = ₹75,000. Taxable income = ₹14,25,000. Tax: ₹0 (0–4L) + ₹20,000 (5% on 4–8L) + ₹40,000 (10% on 8–12L) + ₹33,750 (15% on 12–14.25L) = ₹93,750. Cess (4%): ₹3,750. Total new regime tax: ₹97,500. This is the benchmark to beat before considering old regime.
Three Regime Comparisons — When New Regime Wins, When Old Regime Wins, and the Narrow Band in Between
Scenario 1: Kavitha, 29, ₹12L gross salary, no home loan, renting in Chennai
Kavitha is a software engineer with no home loan. She invests ₹1.2L in 80C instruments (EPF + ELSS), pays ₹18,000 health insurance (80D), and claims HRA of ₹96,000.
New regime: Taxable income = ₹12L − ₹75K SD = ₹11.25L. Tax = ₹0 (0–4L) + ₹20K (4–8L) + ₹32,500 (10% on 8–11.25L) = ₹52,500. Section 87A rebate: income ≤ ₹12L → rebate = ₹60,000 > tax. New regime tax = ₹0.
Old regime: Deductions = ₹50K SD + ₹1.2L (80C) + ₹96K (HRA) + ₹18K (80D) = ₹2.84L. Taxable income = ₹12L − ₹2.84L = ₹9.16L. Tax = ₹12,500 (5% on 2.5–5L) + ₹83,200 (20% on 5–9.16L) = ₹95,700. Cess: ₹3,828. Old regime tax: ₹99,528.
New regime saves ₹99,528 at ₹12L income — regardless of deductions. The 87A rebate makes this comparison one-sided.
Scenario 2: Deepak, 38, ₹16L gross salary, home loan, HRA, NPS
Deepak has: home loan (₹2L interest under 24(b)), HRA exemption ₹1.5L (metro city), 80C ₹1.5L (EPF + PPF), NPS 80CCD(1B) ₹50K, 80D ₹50K (senior citizen parents), old regime SD ₹50K. Total old regime deductions: ₹6.0L.
Old regime: Taxable = ₹16L − ₹6L = ₹10L. Tax = ₹12,500 + ₹1,00,000 (20% on 5–10L) = ₹1,12,500. Cess: ₹4,500. Old regime tax: ₹1,17,000.
New regime: Taxable = ₹16L − ₹75K SD = ₹15.25L. Tax = ₹20K + ₹40K + ₹60K (15% on 12–15.25L = ₹48,750) = ₹1,08,750 + ₹0.25L portion... let me recalculate: ₹20K + ₹40K + 15% on ₹3.25L = ₹48,750. Total = ₹1,08,750. Cess: ₹4,350. New regime tax: ₹1,13,100.
Old regime saves ₹1,13,100 − ₹1,17,000 = old regime costs ₹3,900 more. Wait — this means new regime is better even here! At exactly ₹6L deductions at ₹16L income, new regime still edges out. For old regime to win here, total deductions need to exceed ₹6.25L. This illustrates how narrow the old regime advantage has become in FY 2026-27. Deepak should check if his actual deductions exceed ₹6.25L before defaulting to old regime.
Scenario 3: Prerna, 45, ₹30L income — which regime wins?
Prerna is a senior manager. Old regime deductions: SD ₹50K + 80C ₹1.5L + 24(b) ₹2L + HRA ₹1.8L (high metro city rent) + NPS ₹50K + 80D ₹50K = ₹6.8L.
Old regime: Taxable = ₹30L − ₹6.8L = ₹23.2L. Tax = ₹12,500 + ₹1,00,000 + 30% on ₹13.2L (₹3,96,000) = ₹5,08,500. Cess: ₹20,340. Old regime: ₹5,28,840.
New regime: Taxable = ₹30L − ₹75K = ₹29.25L. Tax = ₹20K + ₹40K + ₹60K + ₹80K + ₹1,00,000 + 30% on ₹5.25L (₹1,57,500) = ₹4,57,500. Cess: ₹18,300. New regime: ₹4,75,800.
New regime saves ₹5,28,840 − ₹4,75,800 = ₹53,040 at ₹30L with ₹6.8L in deductions. Even with a maxed deduction stack, the new regime's lower marginal rates win decisively at higher incomes.
Regime Rules — What You Can and Cannot Claim, Switching Timelines, and the Surcharge Difference
New regime — allowed deductions: Standard deduction ₹75,000 (salaried); employer's NPS contribution under Section 80CCD(2) (deductible without limit but subject to employer's actual contribution and benefit structure — typically 10% of basic salary). That is all. HRA, LTA, food coupons, home loan interest, 80C, 80D, 80E, 80G — none are available.
Old regime — available deductions (key ones):
- Standard deduction: ₹50,000
- Section 80C: ₹1,50,000 (EPF, PPF, ELSS, LIC, NSC, home loan principal, tuition fees)
- Section 80D: ₹25,000 self/family (₹50,000 if senior citizen), ₹25,000 parents (₹50,000 if senior citizen parents)
- Section 24(b): ₹2,00,000 home loan interest (self-occupied property)
- Section 80CCD(1B): ₹50,000 additional NPS contribution by employee
- HRA exemption: least of actual HRA received, actual rent paid minus 10% of salary, or 50%/40% of salary for metro/non-metro
- Section 80E: education loan interest (no upper limit, for 8 years)
- Section 80G: donations to eligible organisations
Switching between regimes: Salaried employees can switch between old and new regime each financial year by informing their employer at the start of the year. The default (if no choice communicated) is new regime from FY 2024-25. Self-employed individuals and those with business income can switch from new to old regime only once — thereafter they cannot switch back to the new regime if they revert to old. This is a critical constraint for consultants and professionals who might have variable deduction stacks year to year.
Surcharge rates — where new regime has a significant advantage: New regime caps surcharge at 25% on tax (for income above ₹5 crore). Old regime surcharge: 10% (₹50L–₹1Cr), 15% (₹1Cr–₹2Cr), 25% (₹2Cr–₹5Cr), 37% (above ₹5Cr). The 37% vs 25% surcharge difference at very high incomes makes the new regime significantly better for top earners even with full deduction stacks. Cess: 4% on (tax + surcharge) under both regimes.
What Taxpayers Get Wrong When Choosing Between Regimes
Defaulting to old regime because 'deductions reduce tax' without computing actual numbers. The old regime's reputation for being better with deductions was built under the pre-FY 2026-27 slabs. The new regime's FY 2026-27 slabs are dramatically more favourable — 10% at ₹8–12L vs 20% in old regime at ₹5–10L. Many people who would have been better off in old regime two years ago are now firmly in new regime territory. Always compute both before choosing.
Treating the ₹87A rebate as permanent when switching regimes. The ₹12L income = zero tax is specific to the new regime (FY 2026-27). Under the old regime, the 87A rebate applies only if net taxable income (after all deductions) is ≤ ₹5L, giving a maximum rebate of ₹12,500. If your income is ₹12L and you switch to old regime, you pay real tax even with maximum deductions — you do not get zero tax.
Not telling the employer the chosen regime before the year begins. Your employer deducts TDS based on their default regime assumption (new regime from FY 2024-25). If you intend to claim old regime deductions (home loan, HRA, 80C), you must inform your employer via Form 12BB at the start of the financial year. Mid-year switches with the employer are at the employer's discretion; the official switch is done in the ITR. If you miss this, you will either pay excess TDS through the year (and wait for an ITR refund) or owe a lump sum TDS reconciliation at year-end.
Ignoring the interaction between employer NPS contribution and regime choice. Employer NPS contribution (80CCD(2)) is deductible in BOTH regimes — it is the only deduction available in the new regime beyond the standard deduction. If your employer contributes significantly to NPS (common in government and PSU employment), this benefit exists regardless of which regime you choose. Factor this in before concluding the old regime is necessary for your NPS benefit.
Frequently Asked Questions
What are the new regime income tax slabs for FY 2026-27?
New regime slabs for FY 2026-27 (AY 2027-28): ₹0–4L: Nil; ₹4–8L: 5%; ₹8–12L: 10%; ₹12–16L: 15%; ₹16–20L: 20%; ₹20–24L: 25%; above ₹24L: 30%. Standard deduction ₹75,000. Section 87A rebate: income up to ₹12L → tax = ₹0 (rebate of ₹60,000). For salaried employees, the effective tax-free threshold is ₹12.75L (₹12L income limit + ₹75K standard deduction). Only deductions available: ₹75K standard deduction and employer NPS contribution (80CCD(2)). Surcharge: maximum 25%. Cess: 4%.
What are the old regime income tax slabs for FY 2026-27?
Old regime slabs: ₹0–2.5L: Nil; ₹2.5–5L: 5%; ₹5–10L: 20%; above ₹10L: 30%. Standard deduction: ₹50,000. Section 87A rebate: net taxable income up to ₹5L → rebate up to ₹12,500. Available deductions include Section 80C (₹1.5L), 80D (₹25K/₹50K), Section 24(b) home loan interest (₹2L), 80CCD(1B) NPS (₹50K), HRA exemption, LTA, 80E (education loan), 80G (donations). Surcharge: up to 37% (vs 25% max in new regime — new regime has a significant advantage at very high incomes).
Which tax regime is better for a ₹12 lakh salary?
New regime is clearly better. At ₹12L gross income, new regime: standard deduction ₹75K → taxable ₹11.25L → tax ₹52,500 → Section 87A rebate wipes it out → final tax ₹0. Old regime at ₹12L even with ₹3L+ in deductions (80C + HRA + 80D) still pays ₹20,000–₹40,000 in tax (taxable income above ₹5L means no 87A rebate). At ₹12L income, the new regime is unbeatable. The old regime 87A rebate caps at ₹5L net taxable, requiring deductions of ₹7L+ from ₹12L income to reach zero tax — impossible within standard deduction limits.
At what income does the old regime start to win?
With FY 2026-27 slabs, the old regime wins only in a narrow band (approximately ₹13L–₹18L) AND only with a very large deduction stack (₹6L+) including home loan interest (₹2L), metro HRA (₹1.2–1.8L), full 80C (₹1.5L), NPS (₹50K), and 80D (₹25–50K). Below ₹13L: new regime always wins due to 87A rebate. Above ₹18L: new regime's lower marginal rates (25%/30% only above ₹20L/₹24L vs 30% above ₹10L in old regime) typically win even with large deduction stacks. Use the calculator with your actual numbers to find your specific crossover.
Can I switch between old and new tax regime every year?
Salaried employees: yes, you can switch between old and new regime each financial year. Inform your employer at the start of the year (new regime is default if you say nothing). The final choice is made at ITR filing — even if your employer deducted TDS on new regime, you can choose old regime in the ITR and claim the deductions there. Self-employed/business income: you can switch from new to old once, but once you exercise that option and want to go back to new, you cannot. This is a one-way door for business taxpayers.
Is HRA exempt under the new tax regime?
No. HRA exemption is not available under the new tax regime. Under the new regime, the only allowances available are the ₹75,000 standard deduction and employer NPS contribution. All other salary allowances — HRA, LTA, food coupons, telephone reimbursements — are fully taxable. Under the old regime, HRA exemption is the least of: (a) actual HRA received, (b) actual rent paid minus 10% of salary, (c) 50% of salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metro. If you pay high rent in a metro, HRA exemption can be substantial and may tip the comparison to old regime.
What deductions are available in the new tax regime?
New tax regime allows: (1) Standard deduction of ₹75,000 for salaried employees and pensioners; (2) Employer's contribution to NPS under Section 80CCD(2) — deductible without cap but limited to actual employer contribution, which is often 10% of basic salary for government employees; (3) Agniveer Corpus Fund contribution under Section 80CCH. Everything else — Section 80C, 80D, 80E, 80G, Section 24(b) home loan interest, HRA, LTA, 80CCD(1B) NPS self-contribution — is not deductible in the new regime.
Is Section 80C available under the new tax regime?
No. Section 80C deductions (PPF, ELSS, LIC premiums, EPF, NSC, 5-year FD, home loan principal, tuition fees) are not deductible under the new tax regime. Investments like PPF and ELSS continue to grow and the proceeds may be tax-advantaged on maturity (PPF maturity is tax-free; ELSS gains are taxed as LTCG at 12.5% above ₹1.25L), but the ₹1.5L upfront deduction from income is not available. This is the single largest deduction lost in the new regime and the primary reason the old regime remains relevant for investors in the 15–20% new regime slabs.