Tax Glossary
Old vs New Tax Regime for FY 2025-26 (AY 2026-27)
The new tax regime is the default regime for eligible individuals for AY 2026-27, but the old regime can still be better when deductions and exemptions are high. The right answer depends on income, age, salary status, deductions, house-property interest, and whether you have business or professional income.
New tax regime slabs for AY 2026-27
| Taxable income | Rate |
|---|---|
| Up to Rs. 4,00,000 | Nil |
| Rs. 4,00,001 to Rs. 8,00,000 | 5% |
| Rs. 8,00,001 to Rs. 12,00,000 | 10% |
| Rs. 12,00,001 to Rs. 16,00,000 | 15% |
| Rs. 16,00,001 to Rs. 20,00,000 | 20% |
| Rs. 20,00,001 to Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
Old regime basics
The old regime keeps the older slab structure but allows many deductions and exemptions. Common items include section 80C, 80D, HRA exemption, home-loan interest rules, eligible donations, education loan interest, and certain NPS deductions.
- Below 60 years: basic exemption generally starts up to Rs. 2,50,000.
- Age 60 to 79: basic exemption generally starts up to Rs. 3,00,000.
- Age 80 and above: basic exemption generally starts up to Rs. 5,00,000.
- Resident individuals may get old-regime 87A rebate up to Rs. 12,500 when taxable income does not exceed Rs. 5,00,000.
Examples
Salary income with low deductions
A salaried taxpayer earning Rs. 10,00,000 with limited old-regime deductions may often benefit from the new regime because the slab rates and rebate threshold are more favourable.
Salary income with high deductions
A taxpayer claiming 80C, HRA, home-loan interest and medical insurance may find the old regime competitive. Always compare taxable income under both regimes before filing.
Freelancer or business owner
If there is business or professional income, Form 10-IEA rules can affect regime selection. Do not switch casually without checking the due date and once-in-lifetime restriction rules.
When to choose old regime
- You have strong eligible deductions and exemptions.
- HRA and home-loan interest materially reduce taxable income.
- You need to use old-regime-only deductions.
- Your business/professional income requires a deliberate Form 10-IEA decision.
When to choose new regime
- Your deductions are low or hard to document.
- You prefer a simpler return with fewer deduction schedules.
- Your taxable income falls within the new-regime rebate band.
- You want to compare without manually calculating multiple old-regime exemptions.
Use the tax and refund calculator
Related current ITR guides
Sources reviewed
This page is a practical guide for individual filing. Surcharge, special-rate income, foreign tax relief, and business regime restrictions should be reviewed separately before filing.
