New vs Old
Tax Regime

It depends on your deductions. Under FY 2026-27 rules, the new regime is tax-free up to ₹12 lakh thanks to the ₹60,000 Section 87A rebate, plus a ₹75,000 standard deduction for salaried — so total tax-free is ₹12.75 lakh salary. The old regime only becomes better above ₹12-15 lakh income if your combined 80C + 80D + HRA + home loan interest deductions exceed roughly ₹4-5 lakh. For most salaried Indians, the new regime now wins by default.

Salaried employees can switch between old and new regime every financial year. Business/professional income earners can switch only once (from new to old or vice versa). File the choice via Form 10IE with your ITR.

Key deductions lost: Section 80C (₹1.5L), Section 80D (health insurance), HRA exemption, LTA, home loan interest (Section 24), professional tax, and most Chapter VI-A deductions. You still get ₹75,000 standard deduction and NPS employer contribution (80CCD(2)).

New regime FY 2026-27 slabs: 0% up to ₹4L, 5% for ₹4-8L, 10% for ₹8-12L, 15% for ₹12-16L, 20% for ₹16-20L, 25% for ₹20-24L, 30% above ₹24L. Plus 4% Health & Education Cess on the tax. Section 87A rebate up to ₹60,000 makes income up to ₹12 lakh effectively tax-free. Old regime slabs (unchanged): 0% up to ₹2.5L, 5% for ₹2.5-5L, 20% for ₹5-10L, 30% above ₹10L, with a ₹12,500 87A rebate making ₹5L tax-free.

Section 87A rebate under the new regime FY 2026-27 is up to ₹60,000 — making total tax liability nil for resident individuals with taxable income up to ₹12 lakh. For salaried taxpayers, add the ₹75,000 standard deduction and the effective tax-free salary becomes ₹12.75 lakh. Under the old regime, the 87A rebate is ₹12,500 — making income up to ₹5 lakh tax-free.