The core trade-off
India's new tax regime (the default since FY 2023-24) offers lower slab rates and a larger Section 87A rebate (tax-free up to ₹12,00,000 taxable income for FY 2026-27), but does not allow most deductions — no Section 80C (PPF, ELSS, life insurance), no HRA exemption, no home loan interest deduction. The old regime keeps those deductions available but taxes income at higher slab rates.
When the new regime tends to win
If you don't have large 80C investments, don't pay rent (or don't claim HRA), and don't have a home loan, the new regime's lower rates and bigger rebate usually mean less tax — with no paperwork required to claim deductions you're not using anyway.
When the old regime tends to win
If you already invest close to the ₹1,50,000 Section 80C limit, claim HRA on a significant rent payment, and/or deduct home loan interest, those deductions can lower your taxable income enough that the old regime's higher rates still work out to less total tax than the new regime's lower rates on a larger taxable base.
A worked comparison
Consider a ₹12,00,000 gross salary. Under the new regime, after the ₹75,000 standard deduction, taxable income is ₹11,25,000 — within the ₹12,00,000 rebate threshold, so tax is ₹0. Under the old regime with the full ₹1,50,000 Section 80C deduction and the ₹50,000 standard deduction, taxable income is ₹10,00,000, which produces roughly ₹1,17,000 in tax (slabs plus cess) — meaningfully more than the new regime's zero, even with the deduction.
The gap narrows or reverses at different income levels and deduction amounts — use the Old vs New Regime Comparison Calculator below with your actual numbers rather than relying on a single example.
You can switch every year (salaried individuals)
Salaried individuals without business income can choose either regime each financial year when filing their return — there's no lock-in. This makes it worth re-checking the comparison annually, especially after a salary change or a change in your 80C/HRA situation.