The new tax regime is the default for individuals. It has lower slab rates but removes most deductions and exemptions, such as Section 80C, 80D and HRA. The old regime keeps those deductions at higher slab rates.
For FY 2025-26, the new regime has slabs from nil up to ₹4 lakh, rising in steps of ₹4 lakh to 30% above ₹24 lakh. A rebate under Section 87A means no tax is payable where taxable income does not exceed ₹12 lakh, which is ₹12.75 lakh of salary after the ₹75,000 standard deduction.
The old regime can still work out lower if you claim large deductions, for example a home loan with interest under Section 24(b), full 80C investments, health insurance and HRA. Compare both before filing.
Key points
- Salaried individuals can choose the regime every year at the time of filing the return.
- Those with business income can switch back from the new regime only once.
- Standard deduction: ₹75,000 under the new regime, ₹50,000 under the old.
- Use the income tax calculator to compare both regimes.
General information only, not professional advice. Section references are to the Income-tax Act, 1961; corresponding provisions of the Income-tax Act, 2025 apply from 1 April 2026. Thresholds and dates may change by notification.
