New vs Old Tax Regime 2026–27: Which Is Better for Salaried Employees in India?
Choosing between the new and old tax regime for 2026–27 is an important financial decision for salaried employees in India. Whether you earn ₹6 lakh, ₹10 lakh, ₹15 lakh or more annually, selecting the appropriate income tax regime can make a meaningful difference to your yearly tax liability and take-home salary.
The choice may appear straightforward at first. The new tax regime offers lower tax rates, wider income slabs and a substantial rebate for eligible taxpayers. The old tax regime, on the other hand, continues to provide deductions and exemptions for qualifying expenses such as eligible investments, health insurance, house rent and home-loan interest.
But which option actually helps you save more tax?
The answer depends on your income, salary structure, available deductions and personal financial circumstances. A salaried professional paying substantial rent and home-loan interest may have a different outcome from an employee with the same salary but very few deductions.
Another important development is that the Income-tax Act, 2025 came into effect on 1 April 2026, introducing the concept of a tax year. Although the legislation has been reorganised, taxpayers continue to have the choice between the old and new tax regimes under the applicable conditions.
This guide explains the income tax slabs for 2026–27, standard deductions, tax rebates, exemptions and practical salary calculations in simple English. It will help you understand the differences and make a better-informed decision before selecting your tax regime.
Understanding the Tax Year 2026–27 in India
Before comparing tax rates, it is important to understand which financial period the rules apply to.
The tax year 2026–27 covers income earned between 1 April 2026 and 31 March 2027.
Under the Income-tax Act, 2025, the term “Tax Year” replaces the earlier terminology of “Previous Year” and “Assessment Year” for income covered by the new legislation.
For example, if an employee receives salary from April 2026 through March 2027, that income belongs to Tax Year 2026–27. The corresponding income tax return is ordinarily filed after the tax year ends, during 2027.
This distinction matters because Assessment Year 2026–27 under the earlier system relates to income earned during Financial Year 2025–26.
The Income Tax Department has confirmed that the new regime continues as the default system, while eligible taxpayers can choose the old regime.
What Is the New Tax Regime in India?
The new income tax regime is a system that provides comparatively lower tax rates across several income slabs while restricting many of the deductions and exemptions available under the old system.
Its main objective is to make personal income taxation simpler and reduce the need for taxpayers to claim numerous deductions to lower their tax liability.
For salaried employees, the new regime is particularly relevant because it provides a standard deduction of up to ₹75,000 and a tax rebate for eligible resident individuals with qualifying taxable income up to ₹12 lakh.
Under the applicable rules, the new regime is the default option. This means that if an employee does not communicate a different preference to their employer, salary tax deduction calculations will generally follow the new regime.
However, being the default does not mean that it is automatically the best choice for every employee.
New Tax Regime Slabs for 2026–27
The following rates apply to ordinary taxable income under the new regime for Tax Year 2026–27:
| Annual Taxable Income | Income Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
These rates are applied progressively. An employee does not pay the highest applicable percentage on their entire taxable income.
For example, if an individual’s taxable income is ₹14 lakh, only the amount above ₹12 lakh and up to ₹14 lakh falls within the 15% slab. The lower portions of income are taxed at their respective rates.
Health and Education Cess of 4% applies to the income tax and applicable surcharge after considering the relevant rebate or relief.
Understanding the ₹12 Lakh Tax Rebate Under the New Regime
One of the most significant advantages of the new tax regime is the enhanced tax rebate available to eligible resident individuals.
Under the applicable provisions, a resident individual with total taxable income up to ₹12 lakh may qualify for a rebate of up to ₹60,000 against income tax calculated at normal slab rates.
This can reduce the final income tax liability on qualifying income to zero.
However, the rebate should not be confused with the basic tax exemption limit.
The new regime’s basic exemption limit is ₹4 lakh. Tax is calculated on income above that amount according to the applicable slabs. The rebate may subsequently reduce the calculated tax.
Example: How the ₹12 Lakh Rebate Works
Consider a resident individual whose total taxable income is exactly ₹12 lakh and consists entirely of income taxable at normal slab rates.
| Income Slab | Tax Calculation |
|---|---|
| First ₹4 lakh | ₹0 |
| Next ₹4 lakh at 5% | ₹20,000 |
| Next ₹4 lakh at 10% | ₹40,000 |
| Total Tax Before Rebate | ₹60,000 |
| Eligible Tax Rebate | ₹60,000 |
| Final Income Tax | ₹0 |
In this example, the rebate completely offsets the calculated income tax.
Important: The rebate is not available against tax on certain incomes subject to special tax rates, such as specified capital gains or lottery winnings. The applicable residency and income conditions must also be satisfied.
For taxable income slightly above ₹12 lakh, marginal relief may be available under the prescribed rules. Therefore, crossing the ₹12 lakh threshold does not necessarily result in an immediate large increase in tax.
Why Salaried Employees May Pay Zero Tax on Salary Up to ₹12.75 Lakh
For qualifying salaried employees, the standard deduction under the new regime creates an additional benefit.
The new regime allows a standard deduction of up to ₹75,000 from eligible salary income.
This means an employee earning ₹12.75 lakh in eligible annual salary, with no other taxable income and no adjustments affecting the calculation, may have taxable income of ₹12 lakh after the standard deduction.
Practical Example: Annual Salary of ₹12,75,000
| Particulars | Amount |
|---|---|
| Annual Eligible Salary | ₹12,75,000 |
| Standard Deduction | ₹75,000 |
| Taxable Income | ₹12,00,000 |
| Tax Before Rebate | ₹60,000 |
| Eligible Rebate | ₹60,000 |
| Final Income Tax | ₹0 |
This explains why the ₹12.75 lakh figure is frequently discussed in relation to the new tax regime.
Nevertheless, ₹12.75 lakh is not a universal tax-free limit for every type of income or every salary package.
Cost to Company (CTC) may include employer provident fund contributions, gratuity provisions and other components that are not necessarily treated as ordinary taxable salary in the same manner.
Employees should calculate their actual taxable salary rather than relying only on the CTC amount mentioned in an employment offer.
What Is the Old Tax Regime?
The old income tax regime uses the traditional slab structure and permits a broader range of deductions and exemptions.
It may be beneficial for employees who have substantial qualifying expenses, investments and salary-related exemptions.
For example, eligible taxpayers may be able to claim benefits associated with:
- Employee Provident Fund contributions and specified investments
- Eligible life insurance premiums
- Public Provident Fund contributions
- House Rent Allowance exemption
- Qualifying health insurance premiums
- Interest paid on eligible housing loans
- Certain other deductions subject to applicable conditions
These provisions are commonly recognised by their section numbers under the Income-tax Act, 1961, such as Section 80C, Section 80D and Section 24(b). Corresponding provisions under the Income-tax Act, 2025 apply for Tax Year 2026–27.
Although the old regime provides more opportunities to reduce taxable income, its regular slab rates are generally higher than those of the new regime.
Old Tax Regime Slabs for 2026–27
For individuals below 60 years of age, the ordinary income tax slab rates under the old regime are:
| Annual Taxable Income | Income Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Under the old regime, eligible resident senior citizens aged 60 to below 80 have a basic exemption limit of ₹3 lakh, while eligible resident super senior citizens aged 80 or above have a basic exemption limit of ₹5 lakh.
The old regime also provides an eligible resident individual with total taxable income up to ₹5 lakh a rebate of up to ₹12,500, subject to the applicable conditions.
The standard deduction for eligible salaried employees under the old regime is up to ₹50,000.
New vs Old Tax Regime 2026–27: Key Differences
The following comparison summarises some of the most important differences for salaried employees.
| Feature | New Regime | Old Regime |
|---|---|---|
| Default Tax Regime | Yes | No |
| Basic Exemption Limit (Below 60) | ₹4,00,000 | ₹2,50,000 |
| Salary Standard Deduction | Up to ₹75,000 | Up to ₹50,000 |
| Maximum Regular Rebate | ₹60,000 | ₹12,500 |
| Rebate Income Threshold | ₹12 lakh | ₹5 lakh |
| Traditional 80C-Type Deductions | Generally unavailable | Available if eligible |
| HRA Exemption | Not available | Available if eligible |
| Health Insurance Deduction | Generally unavailable | Available if eligible |
| Maximum Slab Rate | 30% | 30% |
Both regimes may also involve surcharge for high-income taxpayers and Health and Education Cess, subject to applicable rules.
The table makes one point clear: the new regime offers lower rates and a larger standard deduction, but the old regime provides more opportunities to reduce taxable income through qualifying expenses.
This is why comparing only the tax slabs is not enough. Employees should calculate their actual estimated liability under both systems.
New vs Old Tax Regime: Example for a ₹10 Lakh Annual Salary
Consider a salaried employee below 60 years of age who is a resident individual and earns ₹10 lakh annually as eligible taxable salary before the standard deduction.
Assume there is no additional taxable income, no special-rate income and no other deductions or exemptions.
Calculation Under the New Tax Regime
Annual salary: ₹10,00,000
Less standard deduction: ₹75,000
Taxable income: ₹9,25,000
Income tax calculation:
- First ₹4,00,000: Nil
- ₹4,00,000 to ₹8,00,000 at 5%: ₹20,000
- ₹8,00,000 to ₹9,25,000 at 10%: ₹12,500
Total tax before rebate: ₹32,500.
Since the employee’s taxable income is below ₹12 lakh, the qualifying rebate reduces the tax to zero.
Final income tax under the new regime: ₹0.
Calculation Under the Old Tax Regime
Annual salary: ₹10,00,000
Less standard deduction: ₹50,000
Taxable income: ₹9,50,000
Income tax calculation:
- First ₹2,50,000: Nil
- ₹2,50,000 to ₹5,00,000 at 5%: ₹12,500
- ₹5,00,000 to ₹9,50,000 at 20%: ₹90,000
Total tax before cess: ₹1,02,500.
Health and Education Cess at 4%: ₹4,100.
Final income tax under the old regime: ₹1,06,600.
In this simplified example, the new regime results in a substantially lower tax liability.
However, this comparison assumes that the employee has no additional eligible deductions or exemptions under the old regime.
An employee claiming qualifying HRA, investment deductions or housing-loan benefits may arrive at a different old-regime taxable income.
For a fair comparison, the next step is to examine how those deductions influence the final tax calculation at different salary levels.
New vs Old Tax Regime: Example for a ₹12 Lakh Annual Salary
Consider a resident salaried employee below 60 years of age earning ₹12 lakh annually. Assume the employee has no additional income taxable at special rates.
Under the new regime, the standard deduction of ₹75,000 reduces taxable income to ₹11,25,000.
The tax calculated at normal slab rates is ₹52,500. Since the taxable income is below ₹12 lakh, the eligible rebate reduces the final tax liability to zero.
Under the old regime, the standard deduction is ₹50,000. If the employee has no additional eligible deductions or exemptions, taxable income becomes ₹11,50,000.
The resulting income tax, including 4% Health and Education Cess, is ₹1,63,800.
Now suppose the employee also qualifies for ₹1,50,000 in investment-related deductions and ₹25,000 for eligible health insurance premiums under the old regime.
| Particulars | New Regime | Old Regime |
|---|---|---|
| Annual Salary | ₹12,00,000 | ₹12,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| Other Eligible Deductions | ₹0 | ₹1,75,000 |
| Taxable Income | ₹11,25,000 | ₹9,75,000 |
| Final Tax Including Cess | ₹0 | ₹1,11,800 |
Result: The new tax regime is significantly more beneficial in this example.
For the old regime to produce zero tax on ₹12 lakh of eligible salary, the employee would generally need to reduce taxable income to ₹5 lakh or below to qualify for the old-regime rebate.
That means total qualifying exemptions and deductions of at least ₹7 lakh, including the ₹50,000 standard deduction. Such a situation is possible only where the employee genuinely qualifies for substantial additional tax benefits.
New vs Old Tax Regime: Example for a ₹15 Lakh Salary
At a salary of ₹15 lakh, the comparison becomes more interesting because the new regime’s ₹12 lakh rebate is no longer available after the standard deduction.
Tax Calculation Under the New Regime
Annual eligible salary: ₹15,00,000.
Standard deduction: ₹75,000.
Taxable income: ₹14,25,000.
- Income up to ₹4 lakh: Nil tax
- ₹4 lakh to ₹8 lakh at 5%: ₹20,000
- ₹8 lakh to ₹12 lakh at 10%: ₹40,000
- ₹12 lakh to ₹14.25 lakh at 15%: ₹33,750
Total tax before cess: ₹93,750.
Health and Education Cess at 4%: ₹3,750.
Final tax under the new regime: ₹97,500.
Tax Calculation Under the Old Regime With Eligible Deductions
Suppose the employee qualifies for the following amounts:
- Standard deduction: ₹50,000
- Eligible investment deductions: ₹1,50,000
- Eligible health insurance deduction: ₹25,000
- Calculated HRA exemption: ₹2,00,000
- Qualifying home-loan interest deduction: ₹2,00,000
The total exemptions and deductions amount to ₹6,25,000.
This example assumes that the employee meets all legal requirements for the HRA exemption and the housing-loan interest deduction. Claiming both requires the relevant circumstances and supporting evidence; owning a home and paying rent do not automatically establish eligibility.
The resulting taxable income is ₹8,75,000.
Tax under the old regime:
- Income up to ₹2.5 lakh: Nil
- ₹2.5 lakh to ₹5 lakh at 5%: ₹12,500
- ₹5 lakh to ₹8.75 lakh at 20%: ₹75,000
Income tax before cess: ₹87,500.
Health and Education Cess: ₹3,500.
Final tax under the old regime: ₹91,000.
| Tax Regime | Final Tax |
|---|---|
| New Regime | ₹97,500 |
| Old Regime With Assumed Eligible Benefits | ₹91,000 |
| Old-Regime Tax Saving | ₹6,500 |
In this particular situation, the old regime produces a slightly lower tax liability.
However, if the employee does not qualify for those deductions, the new regime may be considerably better.
The lesson is that the best regime depends on eligible deductions, not salary alone.
New vs Old Tax Regime: Example for a ₹20 Lakh Salary
Employees earning ₹20 lakh annually should also compare both regimes before making their final choice.
Assume a resident salaried employee below 60 years of age has ₹20 lakh in annual eligible salary and no additional income.
New Regime Calculation
Annual salary: ₹20,00,000.
Standard deduction: ₹75,000.
Taxable income: ₹19,25,000.
Tax at the applicable progressive slab rates:
- ₹4 lakh to ₹8 lakh at 5%: ₹20,000
- ₹8 lakh to ₹12 lakh at 10%: ₹40,000
- ₹12 lakh to ₹16 lakh at 15%: ₹60,000
- ₹16 lakh to ₹19.25 lakh at 20%: ₹65,000
Total tax before cess: ₹1,85,000.
Health and Education Cess: ₹7,400.
Total tax payable: ₹1,92,400.
Old Regime Calculation
Assume the employee qualifies for these exemptions and deductions:
- Standard deduction: ₹50,000
- Eligible investment deductions: ₹1,50,000
- Health insurance deduction: ₹25,000
- Calculated HRA exemption: ₹2,00,000
- Eligible home-loan interest deduction: ₹2,00,000
After the total qualifying exemptions and deductions of ₹6,25,000, taxable income becomes ₹13,75,000.
Tax under the old regime:
- ₹2.5 lakh to ₹5 lakh: ₹12,500
- ₹5 lakh to ₹10 lakh: ₹1,00,000
- ₹10 lakh to ₹13.75 lakh: ₹1,12,500
Total tax before cess: ₹2,25,000.
Health and Education Cess: ₹9,000.
Total tax payable: ₹2,34,000.
In this example, the new regime saves ₹41,600 despite the employee having substantial qualifying deductions under the old regime.
Salary-Wise Comparison: Which Regime Has Lower Tax?
The following table brings together the key salary examples. All calculations assume a resident individual below 60, ordinary salary income, no surcharge and no income taxable at special rates.
| Annual Salary | New Regime Tax | Old Regime Tax |
|---|---|---|
| ₹10 lakh | ₹0 | ₹1,06,600 without additional deductions |
| ₹12 lakh | ₹0 | ₹1,11,800 with ₹1.75 lakh additional deductions |
| ₹15 lakh | ₹97,500 | ₹91,000 with ₹5.75 lakh additional benefits |
| ₹20 lakh | ₹1,92,400 | ₹2,34,000 with ₹5.75 lakh additional benefits |
Note: The old-regime examples use different assumed deductions to demonstrate how individual circumstances affect the outcome. They are not a like-for-like comparison of employees with identical tax-saving benefits.
The figures illustrate why salaried individuals should compare their complete tax calculations rather than selecting a regime based only on gross salary.
Important Deductions Available Under the Old Tax Regime
The old tax regime can remain useful for employees with qualifying investments, insurance premiums, housing expenses and other eligible deductions.
1. Investment-Related Deductions Traditionally Covered by Section 80C
Under the familiar Income-tax Act, 1961 framework, Section 80C provided deductions for eligible investments and payments up to a combined limit of ₹1.5 lakh.
Examples include eligible provident fund contributions, Public Provident Fund investments, specified life insurance premiums, qualifying children’s tuition fees and certain housing-loan principal repayments.
For Tax Year 2026–27, the Income-tax Act, 2025 uses reorganised provisions, including Section 123 and Schedule XV for corresponding deductions.
The underlying eligibility conditions and applicable limits must be checked before claiming an amount.
2. House Rent Allowance Exemption
Salaried employees receiving House Rent Allowance may qualify for an exemption under the old regime when they actually pay rent and satisfy the relevant requirements.
The exempt amount is generally the lowest of the actual HRA received, rent paid minus 10% of the specified salary, or the applicable percentage of specified salary based on the city.
Under the Income-tax Rules, 2026, the 50% city category covers Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. The applicable percentage for other cities is generally 40%.
The calculation is based on the defined salary components, not automatically on the employee’s entire CTC.
The HRA exemption is not available under the new tax regime.
3. Health Insurance Premium Deduction
Eligible health insurance premiums may qualify for a deduction under the old regime, subject to the applicable conditions and limits.
Under the commonly recognised Section 80D framework, the general limit for qualifying premiums for self, spouse and dependent children is ₹25,000, with higher limits in specified senior-citizen cases.
Additional qualifying deductions may be available for eligible parents, subject to statutory conditions.
4. Home-Loan Interest Deduction
Eligible interest paid on a housing loan may also reduce taxable income under the old regime.
For a qualifying self-occupied residential property, the interest deduction can be up to ₹2 lakh, subject to the applicable conditions.
The actual treatment depends on property ownership, the loan’s purpose, completion conditions and whether the property is self-occupied or let out.
5. National Pension System Contributions
Additional deductions may be available for qualifying National Pension System contributions under the old regime.
Certain employer contributions to recognised pension arrangements can also qualify for deductions under the new regime, subject to the applicable limits.
This is an important exception to the general rule that most traditional deductions are unavailable under the new regime.
How Much Deduction Is Needed to Make the Old Regime Better?
A useful way to compare the regimes is to calculate the level of eligible deductions and exemptions required for the old regime to match the new regime.
For example, at ₹15 lakh of eligible annual salary, the new-regime tax in the earlier calculation is ₹97,500.
Under the old regime, an employee would need approximately ₹5.94 lakh in total eligible deductions and exemptions, including the ₹50,000 standard deduction, to reach a similar tax liability.
At ₹20 lakh of eligible salary, the corresponding amount is approximately ₹7.58 lakh, including the old-regime standard deduction.
These are simplified break-even calculations. They assume an individual below 60 years of age, income taxable at normal rates, no special-rate income and no additional adjustments.
The important point is that having deductions does not automatically make the old regime cheaper. Their total eligible value must be sufficient to offset its higher slab rates.
How to Choose the Best Tax Regime for 2026–27
Salaried employees can follow a straightforward process before selecting their tax regime.
- Calculate annual taxable salary: Review salary components, allowances, perquisites and applicable exemptions rather than relying solely on CTC.
- Identify all taxable income: Include applicable interest, rental income and other income sources.
- List eligible old-regime deductions: Consider investments, health insurance, qualifying HRA and housing-loan benefits.
- Calculate new-regime taxable income: Apply the permitted deductions, including the relevant salary standard deduction.
- Calculate old-regime taxable income: Apply the relevant exemptions and deductions only where eligibility conditions are satisfied.
- Compare final tax: Include applicable rebate, relief, surcharge and Health and Education Cess.
- Select the suitable option: Communicate the preference to the employer and comply with the applicable tax-return filing requirements.
The Income Tax Department provides an official calculator that supports comparisons between the old and new tax regimes.
Employees can access it through the Income Tax Department e-Filing Portal.
For calculations involving income earned from April 2026 onwards, select the Income-tax Act, 2025 and Tax Year 2026–27 rather than Assessment Year 2026–27 under the earlier legislation.
Can Salaried Employees Switch Tax Regimes Every Year?
Eligible salaried individuals who do not have income from business or profession can generally choose between the two regimes for each tax year, subject to the applicable return-filing requirements.
Employees should inform their employer about the intended regime so that salary Tax Deducted at Source (TDS) can be estimated appropriately.
However, the declaration made to an employer for payroll purposes is not necessarily the final tax-regime election.
The legally applicable choice is determined through the prescribed income tax return process and the relevant conditions.
Individuals with business or professional income may face different restrictions and additional procedural requirements when changing regimes.
Common Mistakes Employees Should Avoid
Choosing a Regime Only Because Colleagues Recommend It
Two employees earning identical salaries may have very different tax liabilities because of different deductions, housing arrangements and income sources.
Confusing CTC With Taxable Salary
The total compensation stated in an offer letter does not necessarily represent taxable salary. Employer contributions and other components may receive different tax treatment.
Claiming Ineligible Deductions
Paying an expense does not automatically make it tax-deductible. Every deduction and exemption must satisfy the applicable legal requirements.
Ignoring Income Outside Salary
Bank interest, rental income and taxable capital gains may affect total income and final tax calculations. Some types of income are subject to special tax rates and different rebate treatment.
Investing Only to Obtain a Tax Deduction
Tax benefits should not be the only reason for making an investment or purchasing an insurance product.
Consider liquidity needs, financial goals, product suitability, costs and risk before making long-term commitments.
Frequently Asked Questions About the New and Old Tax Regimes
1. Which tax regime is better for a ₹10 lakh salary in 2026–27?
For an eligible resident salaried employee earning ₹10 lakh from ordinary salary income, the new regime can result in zero income tax after the standard deduction and applicable rebate. The old regime generally requires substantial eligible deductions to achieve a comparable result.
2. Is salary up to ₹12.75 lakh completely tax-free?
Qualifying salary income up to ₹12.75 lakh may result in zero tax under the new regime after the ₹75,000 standard deduction and eligible rebate. However, this is not a universal exemption for all income types, taxpayers or salary packages.
3. Can I claim HRA under the new tax regime?
No. The traditional House Rent Allowance exemption is not available under the new regime. Eligible employees may claim it under the old regime according to the prescribed conditions.
4. Is the old regime better for employees with home loans?
Not necessarily. Eligible home-loan interest deductions can make the old regime more attractive, but the final result depends on salary, other deductions and the applicable tax rates.
5. What is the standard deduction for salaried employees in 2026–27?
The standard deduction is up to ₹75,000 under the new regime and up to ₹50,000 under the old regime for eligible salary income.
6. Is the new tax regime compulsory?
No. It is the default regime, but eligible taxpayers can choose the old regime by following the applicable procedures.
7. Does the ₹12 lakh rebate apply to capital gains?
The enhanced rebate under the new regime does not apply against tax on certain income taxed at special rates, including specified capital gains. The nature of the income must be considered before calculating rebate eligibility.
8. Can I change my tax regime while filing an income tax return?
Eligible salaried taxpayers without business or professional income can generally select the applicable regime through the prescribed return-filing process. The choice must comply with the relevant conditions and deadlines.
Final Verdict: New or Old Tax Regime — Which Should Salaried Employees Choose?
For many salaried employees in India, the new tax regime offers an attractive combination of simpler calculations, lower slab rates and a larger standard deduction.
Its enhanced rebate also provides a significant benefit to eligible resident individuals whose total taxable income does not exceed ₹12 lakh.
However, the old regime remains relevant for employees who qualify for substantial exemptions and deductions, particularly those involving housing expenses, eligible investments and insurance premiums.
There is no single tax regime that is best for every salaried employee.
An employee with a ₹15 lakh salary and significant qualifying deductions may benefit from the old regime, while another employee earning ₹20 lakh could still pay less tax under the new regime despite having several eligible deductions.
The most reliable approach is to calculate tax under both systems using the correct rules for Tax Year 2026–27.
Before making the final choice, check your salary details, verify all deduction claims and compare the final tax amount, including cess and other applicable adjustments.
For an accurate personal calculation, use the official Income Tax Department portal and consult a qualified tax professional when your income or deductions involve complex circumstances.
A careful comparison based on actual taxable income and valid deductions is the best way to choose between the new and old tax regimes in India.