New vs old regime: which one costs less?
For FY 2026-27 the new regime is the default under Section 115BAC. Check the old regime as well when your deductions are large. The table is a starting point. The calculator uses your CTC, rent, and deductions.
- Section 115BAC (1961 Act text as hosted). The new regime, and the default.
- Resident benefits, Section 87A. The page is labelled AY 2026-27. That label is not FY 2026-27. Rebate of ₹60,000 when taxable income is ₹12 lakh or less under Section 115BAC(1A), and a note on marginal relief.
- Employee benefits (page labelled AY 2026-27, not FY 2026-27). Standard deduction of ₹75,000 in the new regime and ₹50,000 in the old regime. HRA under Section 10(13A).
- Threshold limits (page labelled AY 2026-27, not FY 2026-27).
- Income-tax Act, 2025 (CBDT hub).
- Article 276(2) of the Constitution (Legislative Department text). Tax on professions, trades, callings and employments for one person shall not exceed ₹2,500 a year.
Which income band
Read this before you type your own numbers. The first column is taxable income, not CTC. In the new regime the 0% slab runs from ₹0 to ₹4 lakh. In the old regime the 5% slab starts after ₹2.5 lakh. Section 87A still makes the old-regime tax ₹0 up to ₹5 lakh, because the rebate is ₹12,500. The standard deduction is ₹75,000 in the new regime and ₹50,000 in the old regime. A large set of deductions can still make the old regime cheaper once taxable income is above the rebate.
| Taxable income | New regime | Old regime |
|---|---|---|
| ₹0 to ₹4 lakh | Tie at ₹0 | For a resident under 60, both bills are ₹0. The new regime rate on this band is 0%. The old regime slab is 5% after ₹2.5 lakh, and the Section 87A rebate of ₹12,500 cancels that tax up to ₹5 lakh. |
| ₹4 lakh to ₹8 lakh | Usually new | New-regime tax is ₹0. Taxable income is under ₹12 lakh, and the rebate is ₹60,000. From ₹4 lakh to ₹5 lakh the old regime is also ₹0. Above ₹5 lakh the old regime charges tax, so the new regime costs less. |
| ₹8 lakh to ₹12 lakh | Usually new | New-regime tax is still ₹0. At ₹12 lakh the slab tax is ₹60,000 and the rebate is ₹60,000. In this band the old regime charges slab tax. Section 80C ₹1.5 lakh, metro HRA ₹1.5 lakh, Section 80D ₹25,000, and Section 80CCD(1B) ₹50,000 add up to ₹3.75 lakh. Professional tax is capped at ₹2,500 a year. A ₹25,000 professional-tax deduction is not available. Those deductions change the bill only if they move taxable income into a lower band. Use the calculator. |
| ₹12 lakh to ₹12.70 lakh | New wins (rebate band) | Section 87A makes the tax ₹0 up to ₹12 lakh. Marginal relief covers ₹12 lakh to ₹12.70 lakh. The old regime rarely beats this band. |
| ₹12.70 lakh to ₹16 lakh | New usually wins | The old regime wins if large deductions pull taxable income below the new-regime slab. Use the calculator. |
| ₹16 lakh to ₹20 lakh | Depends on deductions | From ₹16 lakh, old-regime deductions start to matter. If total deductions are above ₹4 lakh, the old regime may win. |
| ₹20 lakh and above | Depends on deductions | Metro HRA + Section 80C ₹1.5 lakh + Section 80D ₹50,000 + home-loan interest ₹2 lakh + NPS. The old regime can save ₹20,000 to ₹80,000 or more. |
A rough guide, not your return. Use the calculator for your own numbers. The amounts leave out cess at 4%.
The calculator
Type your CTC, city, rent, age, and the deductions you actually pay. It estimates tax under both regimes, including 4% cess, and the difference between them. Section 80C, Section 80D, Section 80CCD(1B), and home-loan interest under Section 24(b) are old-regime inputs. The new-regime side uses the ₹75,000 standard deduction.
Surcharge and cess
Both regimes add 4% health and education cess on tax plus surcharge. Surcharge starts once total income is above ₹50 lakh.
| Total income | Surcharge rate | New regime cap |
|---|---|---|
| Up to ₹50 lakh | Nil | — |
| ₹50 lakh to ₹1 crore | 10% | 10% |
| ₹1 crore to ₹2 crore | 15% | 15% |
| ₹2 crore to ₹5 crore | 25% | 25% |
| Above ₹5 crore | 37% (old) / 25% (new) | 25% cap |
In the new regime, surcharge stops at 25% at any income. In the old regime it is 37% when income is above ₹5 crore. The difference can be ₹1 lakh or more.
What the new regime drops
HRA exemption applies only in the old regime. If you pay rent and choose the new regime, that rent does not reduce your tax. Put the rent into the calculator and see whether the slab rates still leave you ahead.
PPF, ELSS, LIC, and home-loan principal do not reduce tax in the new regime. Among the NPS deductions, only the employer's contribution under Section 80CCD(2) still counts. If Section 80C is already at ₹1.5 lakh, the tax you give up by choosing the new regime is ₹1.5 lakh times your slab rate. Section 80D and the extra ₹50,000 under Section 80CCD(1B) are old regime only as well.
The new regime standard deduction is ₹75,000. The old regime figure is ₹50,000. The gap is ₹25,000. At a 20% slab that is ₹5,000 of tax. At 30% it is ₹7,500.
In the new regime, taxable income of ₹12 lakh or less, after the standard deduction, has zero income tax under Section 87A. The resident-benefits table sets that rebate at ₹60,000. From ₹12 lakh to ₹12.70 lakh, marginal relief caps the tax before cess at the income above ₹12 lakh. At ₹12.10 lakh that cap is ₹10,000 before the 4% cess, so the tax does not jump to the full slab. Salary around ₹12 lakh to ₹13 lakh is the range where this shows up. The salaried guide puts the same test next to the rest of a salary computation.
CTC to monthly in-hand: new vs old
Basic 40% of CTC, PF capped at ₹3,000 a month, ₹2,400 professional tax, non-metro, no rent. The last column claims the full ₹1.5 lakh 80C plus ₹25,000 80D. In-hand here is before you spend on those investments and insurance. Your own PF already counts toward 80C.
| CTC per year | New regime | Old, no deductions | Old, 80C + 80D |
|---|---|---|---|
| ₹10 lakh | ₹75,530 | ₹67,646 | ₹70,679 |
| ₹12 lakh | ₹91,876 | ₹79,825 | ₹83,625 |
| ₹15 lakh | ₹1,09,113 | ₹96,694 | ₹1,01,244 |
| ₹20 lakh | ₹1,42,518 | ₹1,24,809 | ₹1,29,359 |
| ₹25 lakh | ₹1,73,406 | ₹1,52,924 | ₹1,57,474 |
Monthly in-hand after PF, professional tax and income tax. Add rent, home loan and NPS in the CTC to in-hand calculator for your own answer.