For most salaried earners the choice between the old and the new regime comes down to one question: how much of your income is already protected by deductions you actually claim every year. Everything else is detail.
What actually changed
- The new regime carries wider slabs, so a larger share of income is taxed at lower rates.
- A standard deduction of Rs 75,000 applies to salary income under the new regime.
- The Section 87A rebate now covers a much higher income ceiling, with marginal relief just above it.
- The old regime stays available, with the full set of Chapter VI-A deductions intact.
Who tends to gain from the new regime
If your deductions are limited to provident fund contributions and a small insurance premium, the wider slabs usually win. The arithmetic favours simplicity here, and the filing itself gets shorter.
Who tends to stay with the old regime
A home loan running alongside a fully used 80C limit, health insurance for parents, and house rent allowance on a metro rent can add up to a deduction base large enough that the old regime remains cheaper. This is a calculation, not a preference.
Run both regimes on your own figures once a year. A regime that suited you last year can quietly stop suiting you the moment a loan closes.
A practical sequence
- Total your gross salary, including allowances and perquisites.
- List only the deductions you have documentary proof for.
- Compute tax under both regimes and compare the final liability, including cess.
- Confirm your declaration with your employer early so monthly deduction matches the outcome.
Our Income Tax Calculator computes both regimes side by side, so you can see the gap in rupees rather than in theory.