India offers two tax regimes. The Old Regime has higher tax rates but allows deductions under Sections 80C, 80D, HRA, and more. The New Regime (default from FY 2023-24) has lower slab rates but almost no deductions.

Which Regime Should You Choose?

If your total deductions exceed ₹3-4 lakhs, the old regime might still save you more. For salaried individuals with limited deductions, the new regime is almost always better — especially now that ₹12L income is completely tax-free under it.

Key Changes for FY 2025-26 (Budget 2025)

  • Section 87A rebate raised to ₹12L — zero tax for net taxable income up to ₹12 lakh under new regime
  • New regime slabs restructured: 0% up to ₹4L, 5% (₹4–8L), 10% (₹8–12L), 15% (₹12–16L), 20% (₹16–20L), 25% (₹20–24L), 30% above ₹24L
  • Standard deduction of ₹75,000 retained in new regime
  • New regime remains the default — opt out explicitly for old regime
  • NPS deduction (80CCD 1B) of ₹50,000 available only under the Old Tax Regime — this deduction does not apply under the New Tax Regime (Finance Act 2023)