Old Regime vs New Regime: Real examples at ₹6 lakh, ₹10 lakh, ₹15 lakh, and ₹20 lakh salary. No CA jargon. Just the actual numbers.
Read More: How Tax Changes in 2026 Affect Your Investments
What Each Regime Allows
Old Tax Regime
- Section 80C up to ₹1.5 lakh (PPF, ELSS, LIC, etc.)
- HRA exemption (if you pay rent)
- Home loan interest (Section 24B) up to ₹2 lakh
- Section 80D health insurance premium
- Standard deduction ₹50,000 only
- LTA, professional tax, NPS 80CCD(1B)
- Higher tax rates but more ways to reduce taxable income
✦ New Tax Regime (2026)
- Standard deduction raised to ₹1,00,000
- NO HRA, NO 80C, NO home loan interest deduction
- NO 80D health insurance deduction
- Employer NPS contribution (80CCD2) still allowed
- Lower tax rates across all slabs
- Zero tax up to ₹12L net income (with rebate)
- Simpler — fewer calculations, fewer documents
“The new regime is a good deal if your deductions are small. The old regime wins only when your deductions are large enough to push your taxable income significantly below what the new regime charges on the same gross salary.”
Real Salary Examples — Who Pays Less?
| Salary | Gross Salary | Old Regime Tax | New Regime Tax | Yearly Savings | Result |
|---|---|---|---|---|---|
| ₹6 Lakh | ₹6,00,000 | ~₹26,000 | ₹0 | ₹26,000 | New Regime Wins ✓ |
| ₹10 Lakh | ₹10,00,000 | ~₹52,500 | ~₹25,000 | ~₹27,500 | New Regime Wins ✓ |
| ₹15 Lakh | ₹15,00,000 | ~₹1,05,000 | ~₹1,25,000 | ~₹20,000 | Old Regime Better |
| Salary | Gross Salary | Old Regime Tax | New Regime Tax | Yearly Savings |
|---|---|---|---|---|
| ₹20 Lakh | ₹20,00,000 | ~₹2,85,000 | ~₹2,40,000 | ~₹45,000 |
*₹10L old regime assumes 80C ₹1.5L + 80D ₹25K. †₹15L assumes 80C + HRA ₹1.8L + 80D = ~₹3.5L total deductions. ‡₹20L assumes minimal deductions. Numbers are illustrative; consult a CA for exact figures.
Full Comparison: Every Deduction and Feature
| Feature / Deduction | Old Regime | New Regime (2026) | Impact |
|---|---|---|---|
| Standard Deduction | ₹50,000 | ₹1,00,000 | New Regime Better |
| Section 80C (PPF, ELSS, LIC) | Up to ₹1,50,000 | Not available | Old Regime Only |
| HRA Exemption | Available (metro/non-metro formula) | Not available | Old Regime Only |
| Home Loan Interest (Sec 24B) | Up to ₹2,00,000 | Not available | Old Regime Only |
| Section 80D (Health Insurance) | ₹50,000 / ₹75,000 seniors | Not available | Old Regime Only |
| NPS Self Contribution (80CCD(1B)) | ₹50,000 extra deduction | Not available | Old Regime Only |
| Employer NPS (80CCD(2)) | 14% of basic | 14% of basic — ALLOWED | Both Regimes |
| Section 87A Rebate | Up to ₹5L income: ₹12,500 rebate | Up to ₹12L income: full rebate | New Regime Far Better |
| Tax Rate (₹8–12L bracket) | 20% | 10% | New Regime Better |
| Leave Travel Allowance (LTA) | Exempt twice in 4 years | Not available | Old Regime Only |
| Complexity / Documentation needed | High — many proofs needed | Very low — mostly automatic | New Regime Simpler |
| Best for | Those with large deductions (₹3.75L+) | Most salaried earners below ₹13L | Situation Dependent |
Quick Decision Guide: Which Regime Is Right for You?
Answer These Questions
Frequently Asked Questions
My HR is asking me to choose a regime. What if I choose wrong?
You can still correct it while filing your ITR (Income Tax Return) before the deadline. Your employer deducts TDS based on your declaration, but the final tax calculation happens when you file your return. If you overpaid because you chose the wrong regime, you will get a refund. If you underpaid, you will need to pay the difference with interest.
Read Also: High-Interest Savings vs Stock Market: Risk & Returns Explained
Does switching to the new regime mean I should stop investing in PPF or ELSS?
No — definitely not. PPF and ELSS are still excellent long-term investment products. The only thing that changes is that the deduction for them under Section 80C is not available in the new regime. The underlying investments are still valuable for wealth creation and financial discipline, independent of their tax benefit.
Is the new regime permanent or can the government change it again?
Tax regimes and slab rates are subject to change in every Union Budget. The government has been consistently sweetening the new regime each year since 2020. However, there is no guarantee of future changes. For planning purposes, make your decision on current year rates, not speculative future ones.
The 5-Minute Exercise Everyone Should Do
Open any free online income tax calculator, enter your salary, tick your actual deductions for this financial year, and run the numbers for both regimes. The difference will be visible in under 5 minutes. That 5-minute exercise is worth more than reading any article — including this one. Once you see your actual numbers, the decision becomes obvious.
Click here to get more knowledge – www.incometax.gov.in
Ajay Yadav is a financial writer who simplifies money, savings, and investing for everyday readers. He creates easy-to-understand content that helps people make smarter financial decisions and build long-term wealth.
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