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Budget 2025 completely changed the math. New regime now offers ZERO tax up to ₹12 lakh. Here's exactly when to choose new vs old regime for your salary.
| Feature | New Regime (Default) | Old Regime |
|---|---|---|
| Tax-free limit | ₹12 lakh (₹12.75L for salaried) | ₹5 lakh (with 87A rebate) |
| Standard Deduction | ₹75,000 | ₹50,000 |
| Section 80C deduction | Not allowed | Up to ₹1.5 lakh |
| HRA exemption | Not allowed | Allowed (as per rules) |
| Home loan interest (24b) | Not allowed | Up to ₹2 lakh |
| Section 80D (health insurance) | Not allowed | Up to ₹25,000-₹1 lakh |
| LTA exemption | Not allowed | Allowed |
| NPS deduction (80CCD) | Employer NPS (14%) allowed | Employer + self (₹50K extra) allowed |
| Default regime | YES — default from FY 2024-25 | Must opt-in explicitly |
| Salary | New Regime Tax | Old Regime Tax | Verdict |
|---|---|---|---|
| ₹8 lakh | ₹0 | ₹41,600 | ₹41,600 savings in New |
| ₹10 lakh | ₹0 | ₹83,200 | ₹83,200 savings in New |
| ₹12 lakh | ₹0 | ₹1,04,000 | ₹1,04,000 savings in New |
| ₹15 lakh | ₹1,17,000 | ₹1,95,000 (no deductions) | New better if deductions < ₹3.2L |
| ₹20 lakh | ₹2,96,400 | ₹2,99,000 (with max 80C+80D+HRA) | Old better with full deductions |
| ₹30 lakh | ₹5,46,000 | ₹5,20,000 (with all deductions) | Old better with full deductions |
| Income Slab | Tax Rate | Tax on Slab |
|---|---|---|
| ₹0 – ₹4 lakh | Nil | ₹0 |
| ₹4L – ₹8 lakh | 5% | ₹20,000 |
| ₹8L – ₹12 lakh | 10% | ₹40,000 |
| ₹12L – ₹16 lakh | 15% | ₹60,000 |
| ₹16L – ₹20 lakh | 20% | ₹80,000 |
| ₹20L – ₹24 lakh | 25% | ₹1,00,000 |
| Above ₹24 lakh | 30% | — |
Note: 87A rebate makes income up to ₹12L completely tax-free in new regime. Add 4% cess on tax amount. Standard deduction of ₹75,000 applies to salaried.
New regime is clearly better for ₹10 lakh salary. Tax = ZERO in new regime (₹10L income - ₹75K standard deduction = ₹9.25L taxable, rebate makes it zero). In old regime, tax would be around ₹83,200 even with deductions.
If your salary is below ₹12.75 lakh, switch to new regime — you pay zero tax. If above ₹15 lakh with maximum deductions (80C, HRA, home loan), calculate both to decide. Use our calculator above.
New regime allows: ₹75,000 standard deduction, employer NPS contribution (14% of salary), gratuity exemption, VRS exemption. Most other deductions like 80C, HRA, 80D, home loan interest are NOT allowed.
Yes. Salaried employees can choose their regime at the time of ITR filing every year. If you did not inform your employer, employer deducts TDS under new regime by default. You can still choose old regime in ITR and get refund if eligible.
Share your Form 16 and investments. CA calculates both regimes and files ITR in the one that saves you more. Only ₹299.
