Finance
New Tax Regime vs Old Tax Regime — Which Saves You More Money?
A side-by-side comparison of India's old and new income tax regimes. Find out which one is better for your salary with examples at different income levels.
India’s dual tax regime system confuses millions every year. The old regime lets you claim deductions but charges higher rates. The new regime has lower rates but strips most deductions. Which one saves more money for you?
Quick comparison table
| Feature | Old Regime | New Regime |
|---|---|---|
| Basic exemption | ₹2.5L | ₹3L |
| Standard deduction | ₹50,000 | ₹75,000 |
| 80C deductions | ✅ Up to ₹1.5L | ❌ Not allowed |
| HRA exemption | ✅ | ❌ |
| 80D (medical) | ✅ | ❌ |
| Home loan (24b) | ✅ Up to ₹2L | ❌ |
| NPS 80CCD(1B) | ✅ ₹50K extra | ❌ |
| Section 87A rebate | ₹5L taxable | ₹7L taxable |
Breakeven analysis
The new regime wins when your deductions are below a threshold. Here’s the rough breakeven by income:
| Gross Income | Deductions needed for old regime to win |
|---|---|
| ₹7.5L | Old always loses (87A rebate) |
| ₹10L | ~₹2.5L+ deductions |
| ₹12L | ~₹3.75L+ deductions |
| ₹15L | ~₹3.75L+ deductions |
| ₹20L | ~₹4.25L+ deductions |
Who should choose the new regime?
- Salaried individuals without a home loan
- People who don’t invest in 80C instruments
- Renters without HRA benefit (own house or live with parents)
- Anyone with deductions under ₹3.75 lakh
Who should stick with the old regime?
- People with home loan interest (up to ₹2L deduction)
- Those claiming full HRA exemption in metros
- Individuals maximising 80C + 80D + NPS + home loan = ₹4L+ deductions
- People with medical insurance for elderly parents (80D: ₹50K+ extra)
Pro tip: calculate both every year
Your situation changes. A new home loan, marriage, or job switch can flip the answer. Run both through a tax calculator annually during January (before proof submission deadline).
Compare both regimes instantly with the OurDailyCalc income tax calculator.
TL;DR
- New regime: lower rates, no deductions, simpler
- Old regime: higher rates, allows deductions that can reduce taxable income
- Breakeven: ~₹3.75L in deductions makes old regime better
- Re-evaluate every year — your optimal choice can change
OurDailyCalc Team
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