Short answer
Choose the new regime unless your deductions are large. As a rough guide, the old regime only catches up when you can claim well over ₹3 to 4 lakh.
The two regimes in one paragraph
The new regime has lower slab rates, a large rebate and very few deductions. The old regime has higher slab rates but lets you reduce taxable income through investments and expenses such as 80C, health insurance, HRA and home-loan interest. Neither is better for everyone. It depends on how much you can legitimately deduct.
New regime slabs
| Taxable income | Tax rate |
|---|---|
| Up to 4 Lakh | Nil |
| 4 Lakh to 8 Lakh | 5% |
| 8 Lakh to 12 Lakh | 10% |
| 12 Lakh to 16 Lakh | 15% |
| 16 Lakh to 20 Lakh | 20% |
| 20 Lakh to 24 Lakh | 25% |
| Above 24 Lakh | 30% |
- Standard deduction of ₹75,000 for salaried employees.
- Rebate of up to ₹60,000 when taxable income is ₹12 lakh or less, so tax is nil.
- Marginal relief just above ₹12 lakh so tax never exceeds the excess over ₹12 lakh.
- Employer NPS contribution is one of the few deductions still allowed.
Old regime slabs (below 60)
| Taxable income | Tax rate |
|---|---|
| Up to 2.5 Lakh | Nil |
| 2.5 Lakh to 5 Lakh | 5% |
| 5 Lakh to 10 Lakh | 20% |
| Above 10 Lakh | 30% |
- Standard deduction of ₹50,000.
- Rebate of up to ₹12,500 when taxable income is ₹5 lakh or less.
- Higher basic exemption limits for senior citizens (₹3 lakh at 60 to 79, ₹5 lakh at 80 and above).
- Deductions: 80C up to ₹1.5 lakh (employee PF counts), health insurance, HRA exemption, home-loan interest up to ₹2 lakh, your own NPS up to ₹50,000 and professional tax.
Section numbers may be renumbered under the Income-tax Act, 2025, so the calculator uses plain-language labels.
A simple way to decide
Add up your deductions
80C, health insurance, HRA exemption, home-loan interest and NPS: whatever you can legitimately claim in the old regime.
Enter them in the calculator
Use More options on the calculator. Employee PF is added to 80C for you.
Read the saving panel
It states which regime is cheaper and by how much a month.
As a rough guide, the old regime starts to compete at higher incomes only when total deductions are well over ₹3 to 4 lakh. For salaries up to the ₹12 lakh rebate range, the new regime is usually unbeatable.
Other things to consider
- Switching. Salaried employees can usually choose each year and tell their employer through the declaration form.
- Forced savings. The old regime rewards saving through PPF, ELSS and insurance. Without that push you may save less, so think about whether you would invest anyway.
- Liquidity. New regime take-home is typically higher month to month because there is no need to lock money away.
Run your numbers in the in-hand salary calculator or see the new regime calculator.
Next readWhat is CTC?What sits inside a CTC, and why it is not the money you receive each month.