New vs old tax regime in India: how the Income Tax Calculator compares them
AdvertisementEvery salaried person in India faces the same yearly question: which tax regime should I choose? The new regime has lower rates and few deductions. The old regime has higher rates but lets you subtract investments, insurance, rent allowance and home-loan interest. Which one costs less depends on your numbers, and working it out by hand is tedious. The free Income Tax Calculator estimates your tax under both regimes side by side, with the rebate, surcharge and cess, and tells you which is cheaper. This guide explains how each regime works, with real examples, so that you can read the result with understanding.
Important: this is an educational estimate of tax on ordinary income. It is not tax advice and has not been checked by a chartered accountant. Rules change with each Union Budget, so confirm the current rules with a qualified professional or the Income Tax Department before you file.
The rules the calculator uses
The tool shows the year it follows above the calculator. At the time of writing it applies the rates introduced for FY 2025-26, which were kept for FY 2026-27.
New regime (the default):
| Taxable income | Rate |
|---|---|
| Up to ₹4,00,000 | nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Salaried people and pensioners get a standard deduction of ₹75,000. A rebate of up to ₹60,000 means that no tax is due when taxable income is ₹12 lakh or less, so a salary of up to ₹12.75 lakh is effectively tax-free. Just above that, marginal relief limits the tax to the amount by which income exceeds ₹12 lakh.
Old regime (people under 60):
| Taxable income | Rate |
|---|---|
| Up to ₹2,50,000 | nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
The tax-free limit is ₹3 lakh from age 60 and ₹5 lakh from age 80. The standard deduction is ₹50,000 for salaried people, and a rebate removes the tax when taxable income is ₹5 lakh or less. Most deductions, such as 80C, 80D, HRA and home-loan interest, are allowed.
In both regimes: a 4% health and education cess is added to the tax, and a surcharge applies above ₹50 lakh of income, with marginal relief so that crossing a threshold never costs more than the extra income earned.
How the calculation goes
- Start with your yearly income.
- Subtract the standard deduction if you are salaried or a pensioner.
- Under the old regime, also subtract your claimed deductions.
- Apply the slab rates to the remaining taxable income.
- Subtract the rebate if you qualify.
- Add surcharge if income is high, then add 4% cess.
The tool shows each step in a table so that you can see how the final figure arises.
Worked examples
All figures are for a salaried person below 60, using the tool's rules. The old-regime columns assume deductions of ₹1,50,000 (for example 80C investments) and ₹4,50,000 (80C, health insurance, HRA and home-loan interest together).
| Salary | New regime | Old, ₹1.5L deductions | Old, ₹4.5L deductions |
|---|---|---|---|
| ₹9,00,000 | ₹0 | ₹54,600 | ₹0 |
| ₹12,75,000 | ₹0 | ₹1,40,400 | ₹70,200 |
| ₹15,00,000 | ₹97,500 | ₹2,10,600 | ₹1,17,000 |
| ₹20,00,000 | ₹1,92,400 | ₹3,66,600 | ₹2,73,000 |
| ₹30,00,000 | ₹4,75,800 | ₹6,78,600 | ₹5,85,000 |
At every salary in this table the new regime costs the same or less, even with ₹4.5 lakh of deductions, which is more than most people can claim. The old regime wins only in narrow cases where deductions are very large compared with income, so test your own numbers instead of assuming.
Take a closer look at the ₹15,00,000 salary, which is the tool's example. New regime: taxable income is ₹15,00,000 − ₹75,000 = ₹14,25,000. Slab tax is ₹93,750; adding 4% cess (₹3,750) gives ₹97,500. Old regime with ₹1,50,000 of 80C: taxable income is ₹15,00,000 − ₹50,000 − ₹1,50,000 = ₹13,00,000. Slab tax is ₹2,02,500; with cess (₹8,100) the total is ₹2,10,600. The new regime saves about ₹1,13,100.
When does the old regime win?
The old regime can be cheaper when your deductions are substantial. A rough test: compare the total of your deductions with how much extra tax the old regime's higher rates cost you at your income. For many salaried people at ₹15 lakh and above, deductions would have to be far larger than the usual limits to break even. Typical deductions people can claim include:
- Section 80C: up to ₹1.5 lakh for PPF, ELSS, life insurance premiums, tuition fees and others.
- Section 80D: health insurance premiums.
- HRA: house rent allowance, if you pay rent.
- Home-loan interest on a self-occupied house, up to the permitted limit.
- NPS contributions beyond the common limit.
If you have little to claim, the new regime is nearly always the better choice. If you have a home loan and pay rent and have maximum investments, test both. The calculator does that in one click: add your deductions and compare the two totals.
Using the calculator
- Open the Income Tax Calculator.
- Enter your total yearly income before tax and choose salaried or pension or business or other income.
- Choose your age group.
- For the old regime, enter the deductions you can claim (80C, 80D, HRA, home-loan interest and so on).
- Compare the two totals. The tool shows which regime costs less and by how much, and a breakdown of slab tax, rebate, surcharge and cess for each.
The calculation happens in your browser. Your income is not sent or stored.
What the calculator does not cover
- Capital gains. Gains on shares, mutual funds and property are taxed at special rates and are left out. The tool covers ordinary income: salary, pension, business income and interest.
- Exact HRA and perquisite rules. Enter the final deduction amount you are allowed.
- Advance tax, TDS and interest penalties.
- Your employer's TDS. TDS is spread across the year and depends on declarations you made at work, so it can differ from the final tax. The final tax is settled when you file your return.
- Other incomes taxed separately, and special cases for non-residents.
Switching regimes
Salaried individuals can usually choose a regime each year when filing, while people with business income have more limited switching. Tell your employer which regime you want early in the year so TDS is deducted accordingly, and confirm your own case with a tax professional.
Planning with the result
- Use the result to decide whether new investments are needed for tax at all. If the new regime wins, buy investments for their own merit, not for a deduction.
- Look at your yearly savings goal with the SIP Calculator and the Compound Interest Calculator.
- Interest on fixed deposits is added to income and taxed at your slab; see the FD & RD Calculator for the interest itself.
- Home-loan interest is part of the old-regime decision; check the cost of the loan with the EMI Calculator.
- Business owners charging GST should keep it separate from income; see the GST Calculator.
Common mistakes
- Comparing regimes without including all the deductions you could claim.
- Using last year's rules without checking for budget changes.
- Treating the rebate as if it covers income above the limit; it does not, except through marginal relief.
- Counting GST collected from customers as income.
- Forgetting the 4% cess when calculating by hand.
- Relying on an estimate as the final figure when filing.
Quick answers
Which regime is the default? The new regime. You must opt out of it to use the old one.
Is my salary tax-free up to ₹12.75 lakh? Under the rules above for a salaried person, yes, because of the ₹75,000 standard deduction and the rebate.
Does the calculator include capital gains? No.
Can I trust it for filing? Treat it as an estimate and check with a qualified professional or the official tools.
Is my income stored? No. The calculation runs in your browser.