# New vs Old Tax Regime Comparator

> The new regime has lower rates and a ₹12 lakh rebate but almost no deductions; the old regime has higher rates but allows HRA, 80C, 80D, NPS and home-loan interest. For most salaried people earning up to ₹12.75 lakh the new regime means zero tax. Above that, the old regime wins only if your deductions are large — roughly ₹6–8.5 lakh or more for salaries of ₹15–25 lakh.

Interactive calculator: https://www.industax.com/calculators/tax-regime-comparator

- **Default regime:** New regime
- **New regime tax-free up to:** ₹12.75L salary
- **Switch (salaried):** Every year

## What each regime allows

| Benefit | New regime | Old regime |
| --- | --- | --- |
| Standard deduction (salary) | ₹75,000 | ₹50,000 |
| Section 87A rebate | Up to ₹60,000 (income ≤ ₹12L) | Up to ₹12,500 (income ≤ ₹5L) |
| HRA, LTA | No | Yes |
| 80C, 80D, 80CCD(1B) | No | Yes |
| Home-loan interest (self-occupied) | No | Up to ₹2 lakh |
| Employer NPS (80CCD(2)) | Yes, up to 14% | Yes, up to 10% |
| Maximum surcharge | 25% | 37% |

## Switching rules

- Salaried and others without business income: choose afresh every year when filing
- With business or professional income: opting out of the new regime needs a declaration before the due date, and you can come back to the new regime only once
- Tell your employer at the start of the year so TDS is right; the final choice is made in the ITR

## Worked example: ₹20 lakh salary with big deductions

1. New regime: ₹20,00,000 − ₹75,000 = ₹19,25,000 taxable; tax ≈ ₹1,85,000 + cess.
2. Old regime deductions: standard ₹50,000, HRA ₹2,40,000, 80C ₹1,50,000, 80D ₹25,000, NPS ₹50,000, home-loan interest ₹2,00,000 = ₹7,15,000.
3. Old regime taxable ₹12,85,000; tax = ₹12,500 + ₹1,00,000 + ₹85,500 = ₹1,98,000 + cess.
4. Break-even: the old regime wins only with deductions above about ₹7.6 lakh at this salary.

**Result:** Even with ₹7.15 lakh of deductions, the new regime is cheaper here by about ₹13,000.

## FAQs

### At what deduction level is the old regime better?

It depends on income. For a ₹15 lakh salary, total old-regime deductions (including the ₹50,000 standard deduction) need to exceed about ₹6 lakh; at ₹20 lakh about ₹7.6 lakh; at ₹25 lakh about ₹8.5 lakh. Run your own numbers rather than relying on a rule of thumb.

### Can I choose the old regime if my employer deducted TDS under the new one?

Yes, if you have no business income. You can choose the old regime in your ITR and claim a refund of any excess TDS.

### Does the regime affect capital gains tax?

No. Capital gains on shares and property are taxed at their special rates in both regimes.

## Official sources

- Income Tax Department: https://www.incometax.gov.in/

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.