Old vs. New Tax Regime for FY 2025-26 (AY 2026-27)

Old Tax Regime

Tax Slabs:

• ₹0 – ₹2.5 lakh: Nil
• ₹2.5 – ₹5 lakh: 5%
• ₹5 – ₹10 lakh: 20%
• Above ₹10 lakh: 30%

Key Deductions & Exemptions:

• Section 80C (PPF, ELSS, LIC, etc.): up to ₹1.5 lakh
• Section 80D (Health insurance): Varies
• HRA: Based on rent & salary
• LTA: For domestic travel expenses
• Standard Deduction: ₹50,000 for salaried/pensioners

Other Charges:

• Surcharge: On income > ₹50 lakh (up to 37%)
• Cess: 4% health and education

✅ Best for:

People with home loans, tax-saving investments, HRA, and medical insurance, who can maximize deductions.

New Tax Regime (Revised) FY 2025-26

Tax Slabs:

• ₹0 – ₹4 lakh: Nil
• ₹4 – ₹8 lakh: 5%
• ₹8 – ₹12 lakh: 10%
• ₹12 – ₹16 lakh: 15%
• ₹16 – ₹20 lakh: 20%
• ₹20 – ₹24 lakh: 25%
• Above ₹24 lakh: 30%

Rebate (Section 87A):

• Income up to ₹12 lakh eligible for rebate, resulting in zero tax.

Standard Deduction:

• ₹75,000 for salaried/pensioners (increased from ₹50,000)

No Deductions Allowed:

• No 80C, 80D, HRA, LTA, etc.

✅ Best for:

Individuals with simpler finances, no major deductions, or lower tax-saving investments.

Key Takeaway: