Knowledge Base

Income Tax — Old vs New Regime

Tax = Slab-wise calculation on taxable income + 4% cess

New Regime (default from FY25-26): Lower rates, fewer deductions. No 80C, 80D, HRA.

Old Regime: Higher rates but allows deductions — 80C (₹1.5L), 80D, HRA, LTA, etc.

New Regime best if total deductions < ₹3.75L. Old Regime if deductions > ₹3.75L.

Standard deduction: ₹75,000 (New) vs ₹50,000 (Old) from FY 2024-25.

Income up to ₹12L is effectively tax-free under New Regime (with rebate u/s 87A).

Pro Tip

Calculate tax under BOTH regimes every year. Your optimal regime can change based on deductions claimed.

Income Tax — Old vs New Regime - Complete Guide

Everything you need to know about Income Tax and how to optimize your financial strategy.

Understanding the Formula

The core calculation is based on:

Tax = Slab-wise calculation on taxable income + 4% cess

Key Concepts & Rules

New Regime (default from FY25-26): Lower rates, fewer deductions. No 80C, 80D, HRA.

Old Regime: Higher rates but allows deductions — 80C (₹1.5L), 80D, HRA, LTA, etc.

New Regime best if total deductions < ₹3.75L. Old Regime if deductions > ₹3.75L.

Standard deduction: ₹75,000 (New) vs ₹50,000 (Old) from FY 2024-25.

Income up to ₹12L is effectively tax-free under New Regime (with rebate u/s 87A).

Expert Strategy

Calculate tax under BOTH regimes every year. Your optimal regime can change based on deductions claimed.

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