Key takeaways
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New regime: lower rates but no deductions — no 80C, HRA, home loan interest✓
Old regime: higher rates but deductions can significantly reduce taxable income✓
Break-even: if your total deductions exceed ~₹3.75 lakh, old regime is better✓
From FY2023-24, new regime is the default — opt for old regime explicitly✓
Calculate both every April before declaring to your employerNew regime tax slabs (FY 2024–25)
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Side-by-side: ₹12 lakh income, both regimes
OLD REGIME:
Gross: ₹12,00,000
Minus standard deduction (₹50,000): ₹11,50,000
Minus 80C (₹1,50,000): ₹10,00,000
Minus 80D health insurance (₹25,000): ₹9,75,000
Minus NPS 80CCD (₹50,000): ₹9,25,000
Taxable income: ₹9,25,000
Tax: ~₹1,05,000
NEW REGIME:
Gross: ₹12,00,000
Minus standard deduction (₹75,000): ₹11,25,000
No other deductions
Taxable income: ₹11,25,000
Tax: ~₹1,30,000
Old regime saves ₹25,000 in this scenario. Add HRA exemption if paying rent and the advantage grows.
Old regime advantage — varies by deduction amount
₹15 lakh income. Positive = old regime saves more. At ~₹3.75L deductions, both equal.
₹1L deductions₹-8,000
₹2L deductions₹2000L
₹3L deductions₹15000L
₹4L deductions₹28000L
₹5L deductions₹43000L
₹6L deductions₹58000L
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The practical decision — 3 steps every April
Step 1: List all deductions you actually have:
• Standard deduction: ₹50,000 (old) or ₹75,000 (new)
• 80C (EPF + investments): how much?
• 80D (health insurance): how much?
• HRA (if paying rent): calculated amount
• Home loan interest (80EEA): if applicable
• NPS 80CCD(1B): ₹50,000 if contributed
Step 2: Use the free IT Department calculator at incometax.gov.in → Tax Calculator. Enter your numbers in both regimes.
Step 3: Choose the lower tax option. Declare this to HR before April 30 for correct TDS.
⚠Educational content only. Numbers shown are illustrative — actual returns vary. This is not investment advice. Consult a SEBI-registered financial advisor before investing.
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