How to choose
Old vs New Tax Regime: Making the Right Choice
The Core Trade-off
From FY 2023-24, the new tax regime is the default. It offers lower slab rates and a ₹75,000 standard deduction (raised in Budget 2025), but you give up almost every other deduction — HRA, 80C, home loan interest, and 80D are all disallowed.
The old regime keeps higher slab rates but lets you reduce your taxable income through HRA exemption, investments, insurance, and interest payments. If your total eligible deductions are large enough, they can more than compensate for the higher slab rates.
When the New Regime Usually Wins
- You live in employer-provided accommodation (no HRA to claim).
- You have low 80C investments (under ₹50,000).
- You have no home loan or the interest is under ₹50,000 per year.
- Your income is ₹12.75 lakh or below (zero tax after standard deduction + rebate).
When the Old Regime Usually Wins
- You pay rent and claim HRA exemption of ₹1 lakh or more.
- You maximise 80C (₹1.5L) and NPS 80CCD(1B) (₹50K) every year.
- You have a home loan and pay ₹2 lakh or more in annual interest.
- Your combined deductions (including standard) exceed ₹4–5 lakh.
The Rebate Threshold
Under the new regime for FY 2026-27, no tax is payable if your taxable income (after ₹75,000 standard deduction) is ₹12,00,000 or less — because Rebate u/s 87A (₹60,000 maximum) wipes out the slab tax exactly at that threshold. This means a gross salary of up to ₹12,75,000 results in zero tax in the new regime.
Under the old regime, the rebate applies if taxable income is ₹5,00,000 or less (rebate up to ₹12,500).
Surcharge for High Earners
If your taxable income exceeds ₹50 lakh, a surcharge applies on top of slab tax. In the new regime, surcharge is capped at 25% (even for income above ₹5 crore). In the old regime, a 37% surcharge applies above ₹5 crore. Our calculator handles surcharge automatically.
Documents You Need (to compute accurately)
- Form 16 — issued by your employer; shows gross salary, HRA, professional tax, and TDS deducted.
- Rent receipts — to claim HRA exemption; include landlord PAN if rent exceeds ₹1 lakh per year.
- Investment proofs (80C) — PPF passbook, ELSS statement, LIC premium receipt, home loan principal certificate.
- Health insurance premium receipts (80D) — policy document or bank statement.
- Home loan interest certificate — from your bank, for Section 24(b) deduction.
- NPS transaction statement (80CCD(1B)) — from NSDL or KARVY CRA.
Important Limitations of This Estimate
This calculator is designed for salaried individuals below 60 years of age with income only from salary and other simple sources. It does not cover: capital gains, business income, agricultural income, special rates for specific assets, or senior citizen / very senior citizen slab variations. Confirm your final computation with a chartered accountant or the official Income Tax portal.