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New vs Old Regime Slabs for FY 2025-26
The new tax regime, which became the default from FY 2024-25, was further sweetened in Budget 2025 — the ₹12 lakh rebate limit and revised slabs make it attractive for most salaried employees with moderate deductions.
| Income Slab | New Regime Rate | Old Regime Rate |
|---|---|---|
| ₹0 – ₹2,50,000 | Nil | Nil |
| ₹2,50,001 – ₹4,00,000 | Nil | 5% |
| ₹4,00,001 – ₹5,00,000 | 5% | 5% |
| ₹5,00,001 – ₹8,00,000 | 5% | 20% |
| ₹8,00,001 – ₹10,00,000 | 10% | 20% |
| ₹10,00,001 – ₹12,00,000 | 10% | 30% |
| ₹12,00,001 – ₹16,00,000 | 15% | 30% |
| Above ₹24,00,000 | 30% | 30% |
Key difference: The new regime has lower rates at most income levels, but offers no deductions. The old regime allows significant deductions (80C, 80D, HRA, home loan interest) that can reduce taxable income substantially for those who invest and pay rent.
Section 87A Rebate — Who Pays Zero Tax
Section 87A provides a tax rebate that effectively brings the final tax liability to zero for taxpayers below a threshold income:
- New Regime: If net taxable income (after standard deduction of ₹75,000) is ₹12,00,000 or below, tax is reduced to zero by the rebate. For salaried employees, this means gross salary up to ₹12,75,000 = zero income tax.
- Old Regime: If net taxable income (after all deductions) is ₹5,00,000 or below, tax is reduced to zero. This means a salaried person with ₹7.5–8L gross income and full 80C (₹1.5L) and standard deduction (₹50K) can achieve zero old-regime tax.
💡The 4% Health and Education Cess is applied after the 87A rebate. If the rebate brings tax to ₹0, there is no cess either.
Key Deductions Under Old Regime
| Section | What Qualifies | Limit |
|---|---|---|
| 80C | EPF, ELSS, LIC, PPF, NSC, home loan principal, tuition fees | ₹1,50,000 |
| 80D | Health insurance premiums (self, family, parents) | ₹25K–₹75K |
| HRA | Actual rent paid (if in rented accommodation) | Min of 3 values |
| 24(b) | Home loan interest on self-occupied property | ₹2,00,000 |
| 80E | Education loan interest (8 years) | No limit |
| 80TTA/80TTB | Savings account interest / Senior citizen interest | ₹10K / ₹50K |
None of the above apply under the new regime. The new regime only allows the standard deduction of ₹75,000.
How to Choose the Right Regime
The simplest rule of thumb: if your total eligible deductions under the old regime exceed the break-even deduction amount for your income level, stay old. Otherwise, switch to new.
Break-even deductions (approximate): At ₹10L income, deductions need to exceed ~₹2.5L for old regime to win. At ₹15L, ~₹3.75L. At ₹20L, ~₹4L. If your actual deductions (80C + HRA + 80D + home loan interest) exceed these amounts, old regime likely saves more.
Use the calculator above to get your exact comparison — the "Tax Saved" figure shows exactly which regime is better for your specific numbers.
Frequently Asked Questions
New regime slabs: ₹0–4L = Nil, ₹4–8L = 5%, ₹8–12L = 10%, ₹12–16L = 15%, ₹16–20L = 20%, ₹20–24L = 25%, above ₹24L = 30%. Standard deduction of ₹75,000 applies. Income up to ₹12L (₹12.75L for salaried) is effectively zero-tax due to the enhanced Section 87A rebate.
It depends on your deductions. If 80C + HRA + 80D + other deductions are large enough, old regime saves more. At lower deduction levels, the new regime wins with its lower rates. Use this calculator to compare both for your exact situation — the answer is different for everyone.
New regime: zero tax if net taxable income (after ₹75K standard deduction) is ₹12L or below — so salaried up to ₹12.75L gross pay zero tax. Old regime: zero tax if net taxable income (after all deductions) is ₹5L or below.
₹75,000 under the new regime (from FY 2024-25 Budget) and ₹50,000 under the old regime. It is automatically deducted from gross salary before applying slabs — no proof required.
Key deductions: 80C up to ₹1.5L (EPF, ELSS, LIC, PPF), 80D for health insurance, HRA exemption, Section 24b home loan interest up to ₹2L, LTA, 80E education loan interest, and more. None of these apply under the new regime.
Surcharge is levied on income tax if total income exceeds ₹50 lakh: 10% surcharge for ₹50L–₹1Cr, 15% for ₹1Cr–₹2Cr, 25% for ₹2Cr–₹5Cr (new regime). After surcharge, 4% Health and Education Cess is applied on total tax plus surcharge.
No. Section 80C deductions including employee EPF contribution are not available under the new regime. They are deductible only under the old regime (up to ₹1.5L combined).
For most individuals, the ITR filing deadline is 31 July of the assessment year. For FY 2025-26, the deadline is 31 July 2026. Late filing is possible up to 31 December 2026 with a penalty of ₹5,000 (₹1,000 if income is below ₹5L).
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