Since the new tax regime became the default, every salaried Indian faces the same question at filing time: stick with the old regime and its deductions, or switch to the new regime's lower slab rates? Here's how to decide.
New Regime Tax Slabs (FY 2024-25)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3 lakh | Nil |
| ₹3–7 lakh | 5% |
| ₹7–10 lakh | 10% |
| ₹10–12 lakh | 15% |
| ₹12–15 lakh | 20% |
| Above ₹15 lakh | 30% |
Under Section 87A, if your taxable income is up to ₹7 lakh in the new regime, your tax is effectively zero. With the ₹50,000 standard deduction, salaried people earning up to ₹7.5 lakh pay no tax.
The Key Trade-off
The new regime has lower rates but removes most deductions. The old regime has higher rates but lets you claim 80C, 80D, HRA, home loan interest and more.
So the answer depends on how many deductions you actually use:
- Few/no deductions (renting isn't claimed, no big investments) → new regime usually wins.
- Many deductions (full 80C + 80D + HRA + home loan) → old regime often wins.
📋 Find your best regime in 10 seconds
Enter your income and deductions in our free Income Tax calculator — it compares both regimes and tells you which saves more.
Open Income Tax Calculator →Deductions You Lose in the New Regime
- Section 80C (PPF, ELSS, life insurance) — up to ₹1.5 lakh
- Section 80D (health insurance)
- HRA exemption
- Home loan interest (Section 24b) on self-occupied property
- LTA and most other exemptions
The standard deduction of ₹50,000 is available in both regimes for salaried individuals.
A Quick Rule of Thumb
If your total deductions exceed roughly ₹3.75 lakh, the old regime usually wins. Below that, the new regime tends to be better. But always run your exact numbers — small differences in HRA or home loan interest can flip the result.