Old vs New Tax Regime in India (FY 2025-26)
India's Income Tax Act offers two parallel personal income tax regimes: the old regime (deduction-based with higher slab rates) and the new regime (default since FY 2023-24, with lower slab rates and standard deduction but no other major deductions).
New tax regime slabs (FY 2025-26 indicative, post Budget 2025 reforms): 0-4 lakh → nil; 4-8 lakh → 5%; 8-12 lakh → 10%; 12-16 lakh → 15%; 16-20 lakh → 20%; 20-24 lakh → 25%; above 24 lakh → 30%. Standard deduction ₹75,000 for salaried. Section 87A rebate makes income up to ₹12 lakh effectively tax-free for residents (₹12.75 lakh including standard deduction). No 80C, 80D, HRA, LTA, home loan interest deductions (with limited exceptions).
Old tax regime slabs: 0-2.5 lakh → nil; 2.5-5 lakh → 5%; 5-10 lakh → 20%; above 10 lakh → 30%. Senior citizens (60-79) and super senior (80+) have higher exemption limits (₹3 lakh and ₹5 lakh). Standard deduction ₹50,000. All deductions available: 80C (₹1.5 lakh), 80D (₹25-50K), 80CCD(1B) NPS (₹50K), HRA, home loan interest under 24(b), donations under 80G.
Break-even analysis: for salaried with ₹15-25 lakh income, the new regime is typically more favourable unless deductions exceed ₹4-5 lakh combined (80C + 80D + HRA + home loan). Income tax dept's calculator on incometax.gov.in helps compare. Salaried can choose regime each FY at ITR filing; business/profession income filers can switch only once back to old regime after opting new (Form 10-IEA).
Richify Tip
The new regime is the default — if no choice is made, new regime applies. Employers default TDS calculation to new regime unless employee submits Form 12BB declaring deductions for old regime. Income > ₹50 lakh attracts surcharge: 10% (50L-1Cr), 15% (1-2Cr), 25% (2-5Cr), 37% / 25% (above 5Cr — old/new regime). Marginal relief applies near these thresholds.
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