New Tax Regime vs Old Tax Regime
From FY 2023-24, the new tax regime is the default. You must explicitly choose the old regime to use deductions like 80C, HRA, 80D.
New Tax Regime Slabs FY 2025-26
- Up to Rs.3 lakh: Nil
- Rs.3L to Rs.7L: 5%
- Rs.7L to Rs.10L: 10%
- Rs.10L to Rs.12L: 15%
- Rs.12L to Rs.15L: 20%
- Above Rs.15L: 30%
Rebate u/s 87A: Zero tax if income up to Rs.7 lakh under new regime.
Old Tax Regime Slabs FY 2025-26
- Up to Rs.2.5L: Nil
- Rs.2.5L to Rs.5L: 5%
- Rs.5L to Rs.10L: 20%
- Above Rs.10L: 30%
Who Should Choose Old Regime?
- Those with 80C investments above Rs.1.5 lakh
- Employees paying rent and claiming HRA
- Home loan interest above Rs.2 lakh
- Those with NPS and health insurance deductions
Who Should Choose New Regime?
- Income below Rs.7 lakh (zero tax with rebate)
- Minimal investments or deductions
- Freelancers preferring simplicity