Old vs New Tax Regime: Which Is Better for You?
India's new tax regime offers lower tax rates but removes most deductions. Choosing the right regime can save you ₹30,000-₹1,00,000+ in tax depending on your salary.
Key Differences
New regime: Lower tax rates (0% up to ₹3L, 5% for ₹3-7L, 10% for ₹7-10L, etc.) with ₹75,000 standard deduction. No Section 80C, 80D, HRA, or LTA deductions. Old regime: Higher rates but allows all deductions — 80C (₹1.5L), 80D (₹25K-₹1L), HRA, LTA, home loan interest.
When Old Regime Is Better
If you claim significant deductions: HRA > ₹1.5L/year + 80C (₹1.5L) + 80D (₹25K+) + Home loan interest (₹2L). Generally, old regime saves more for salaried people with HRA who invest in 80C instruments and have a home loan.
When New Regime Is Better
If you rent-free accommodation (no HRA), don't have a home loan, and don't invest much in 80C instruments. The break-even point: if your total deductions exceed ₹3.75-4L, old regime is usually better. Below that, new regime wins.