Every year the question comes back: stay in the new regime, or opt for the old one with its deductions? For tax year 2026-27 the slabs are unchanged from last year, and the new regime has become hard to beat for most people. But not for everyone — so it is worth doing the sum.
The new regime at a glance
| Income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
On top of this, a rebate of up to ₹60,000 means no tax at all if your total income is ₹12 lakh or less — ₹12.75 lakh of salary once the ₹75,000 standard deduction is taken off. Just above ₹12 lakh, marginal relief stops the tax from jumping ahead of the extra income.
The price of the new regime: you give up most deductions — HRA, home-loan interest on a self-occupied house, 80C, 80D and the rest. Your employer's NPS contribution (up to 14% of salary) is still allowed.
The old regime
Slabs start at ₹2.5 lakh (₹3 lakh at 60, ₹5 lakh at 80), with 20% from ₹5 lakh and 30% from ₹10 lakh. The standard deduction is ₹50,000 and the rebate only covers income up to ₹5 lakh. It wins only when your deductions are large.
Example 1 — salary of ₹15 lakh
Deductions available in the old regime: HRA exemption ₹1,20,000, home-loan interest ₹2,00,000, 80C ₹1,50,000 and health insurance ₹25,000.
- Old regime: taxable income ₹9,55,000 → tax ₹1,07,640 including cess.
- New regime: taxable income ₹14,25,000 → tax ₹97,500.
The new regime saves about ₹10,000 even with ₹4.95 lakh of deductions.
Example 2 — salary of ₹25 lakh
Deductions: HRA ₹3,00,000, home loan ₹2,00,000, 80C ₹1,50,000, health insurance ₹50,000 and your own NPS ₹50,000 — ₹7.5 lakh in all.
- Old regime: taxable income ₹17,00,000 → tax ₹3,35,400.
- New regime: taxable income ₹24,25,000 → tax ₹3,19,800.
Still the new regime, by ₹15,600.
So when does the old regime win?
Broadly, when your deductions are very large relative to income — a big HRA claim in a high-rent city, a home loan with high interest, full 80C and 80D, and more. The break-even moves with income, which is why a calculation beats a rule of thumb.
If you have business or professional income, switching regimes is restricted — you can move back to the new regime only once. Decide with care, and before the return due date.
This article is general information based on the law as it stood on 24 Sep 2026. It is not advice for your situation — rules and dates change, and the right answer depends on your facts. Speak to us before acting on it.