The main difference is in deductions and tax rates. The old regime allows multiple deductions (Section 80C up to ₹1.5L, 80D for health insurance, 24(b) for home loan interest up to ₹2L, and more) with a ₹50,000 standard deduction. The new regime allows only a ₹75,000 standard deduction but applies lower tax rates across more brackets. The other critical difference is the Section 87A rebate threshold — zero tax up to ₹5L taxable income in the old regime, vs zero tax up to ₹12L in the new regime. Which is better depends entirely on your personal deductions.

Yes, but only under the new tax regime. The enhanced Section 87A rebate makes tax payable zero if your taxable income (after the ₹75,000 standard deduction) is ₹12 lakh or less. So a gross salary up to ₹12.75 lakh could result in zero tax under the new regime. This applies only to resident Indians with salary income — it does not apply to the old regime, where the rebate threshold is ₹5 lakh.

Not categorically — it depends on your deductions. The new regime is generally better if your total deductions (80C + 80D + home loan interest + others) are less than roughly ₹3.75 lakh, especially for incomes below ₹15 lakh. The old regime is typically better if you're a homeowner with an active loan, a heavy investor with maxed-out 80C, or if your total deductions exceed that threshold. Use this calculator with your actual numbers — the rupee difference will tell you clearly.

Yes. Salaried individuals can choose either regime each financial year at the time of ITR filing. You're not locked in permanently. However, once you file your return for a particular year under a chosen regime, you cannot change it for that year — only for future years. Business owners face more restrictions on switching (they can switch only once out of the new regime back to old), but salaried employees have full flexibility each year.

The new regime does not allow Section 80C (PPF, ELSS, LIC, tuition fees, home loan principal — max ₹1.5L), Section 80D (health insurance premiums), Section 24(b) (home loan interest — max ₹2L), Section 80E (education loan interest), Section 80G (donations), and most other chapter VI-A deductions. The only deduction available in the new regime is the ₹75,000 standard deduction for salaried individuals. NPS employer contribution under Section 80CCD(2) is an exception — it is allowed in the new regime.

Old regime (assuming ₹3L in deductions): Taxable income = ₹15L − ₹50K − ₹3L = ₹11.5L. Tax = ₹12,500 + ₹1,00,000 + ₹45,000 = ₹1,57,500. Add 4% cess = ₹6,300. Total = ₹1,63,800. New regime: Taxable income = ₹15L − ₹75K = ₹14.25L. Tax = ₹20,000 + ₹40,000 + ₹40,000 + ₹33,750 = ₹1,33,750. Add 4% cess = ₹5,350. Total = ₹1,39,100. At ₹15L with ₹3L in deductions, the new regime saves about ₹24,700. With higher deductions, the old regime catches up. Use the calculator for your exact figures.

The maximum Section 80C deduction is ₹1,50,000 per financial year. This is a combined cap across all eligible instruments — PPF, ELSS mutual funds, LIC premiums, home loan principal repayment, tuition fees, and 5-year tax-saving FDs. You cannot exceed ₹1.5L total even if your actual investments are higher. This deduction is available only in the old regime — the new regime does not recognise it.

No. Section 24(b) — which allows deduction of home loan interest up to ₹2 lakh per year for self-occupied property — is not available in the new tax regime. This is one of the biggest reasons many homeowners with large outstanding loans continue to choose the old regime. If you have a home loan with significant interest outgo, factor this in before switching to the new regime.

Health & Education Cess is a 4% surcharge on your computed income tax — not on your income itself. If your tax after all slabs and rebates is ₹1,00,000, the cess adds ₹4,000, making your total tax payable ₹1,04,000. It applies to both old and new regimes equally. If your tax comes to zero due to the Section 87A rebate, the cess is also zero. This cess goes directly to fund government health and education programmes.

No. The standard deduction — ₹50,000 under old regime, ₹75,000 under new regime — is automatic for all salaried individuals. Your employer applies it without requiring any documentation. However, if you claim additional deductions in the old regime (80C, 80D, 24(b)), you must maintain proper investment proofs and submit them to your employer by the deadline they set, usually in January.

This calculator is designed for salaried employees only — it treats salary as the sole income source. If you have business income, freelance income, rental income, or capital gains from mutual funds or stocks, the tax computation becomes significantly more complex. For those scenarios, consult a CA or check our dedicated calculators: capital gains tax calculator for equity/MF gains, rent income tax calculator for rental income, and professional income tax calculator for freelancers.

Once you file your ITR for a financial year under a chosen regime, you cannot revise the regime choice — only other details can be corrected through a revised return. For future years, you can freely switch. This is why running the numbers before filing matters — use this calculator with your actual income and deductions, then double-check with your CA before submitting.

You choose your regime at the time of filing your ITR. For salaried individuals, the standard deadline is July 31st of the assessment year (so July 31, 2026 for FY 2025-26), though the Income Tax Department sometimes extends this. Your employer will also ask for your regime declaration at the beginning of the financial year for TDS purposes — you can change it at ITR filing time if needed.

Yes. This calculator does not account for: HRA exemption (depends on your city, actual rent, and salary structure), LTA (Leave Travel Allowance), senior citizen additional deduction (₹50,000 extra in old regime for age 60+), NPS employer contribution deduction (80CCD(2), allowed even in new regime), and various other specialised exemptions and allowances. For a complete picture, especially if you receive HRA or are a senior citizen, consult your CA before making the final call.

At ₹10 lakh gross with minimal deductions, the new regime almost always wins because the ₹75,000 standard deduction brings taxable income to ₹9.25L — still under ₹12L, so the 87A rebate applies and your tax is zero. Under the old regime with no deductions, taxable income is ₹9.5L and tax (after 87A, which doesn't apply here) works out to ₹1,17,000 plus cess. You'd need very significant deductions to make the old regime competitive at this income level.