The new regime has been the default since FY 2023-24. With FY 2025-26 slabs (after Budget 2026) and the ₹85,000 standard deduction, the break-even at which the old regime starts winning is roughly ₹3.75–4.25 lakh of total deductions, depending on your income band.
| Attribute | Old Regime | New Regime |
|---|---|---|
| Default regime | Opt-in via Form 10-IEA | Default |
| Standard deduction (salaried) | ₹50,000 | ₹85,000 |
| 80C / 80CCD(1) / 80CCC | ₹1.5 lakh | Not allowed |
| 80D health insurance | Up to ₹1 lakh | Not allowed |
| HRA exemption | Allowed (Sec 10(13A)) | Not allowed |
| Home-loan interest (self-occupied) | ₹2 lakh | Not allowed |
| Home-loan interest (let-out) | Fully deductible | Allowed but loss capped at ₹2L |
| Section 87A rebate | Income up to ₹5L | Income up to ₹8L (net) |
| Highest surcharge | 37% | 25% |
| 80CCD(2) employer NPS | Allowed (up to 10% of basic) | Allowed (up to 14% of basic) |
| Switching | Form 10-IEA required, switch back possible | Default, can opt out via 10-IEA |
Our recommendation
Run both calculations every year. Salaried with full HRA + 80C + 80D + ₹2L home-loan interest typically beats the new regime by ₹40-70k a year. Professionals with no deductions, freelancers without HRA, and high earners (₹5 cr+, where surcharge bites) usually win with the new regime.
FAQs
Can I switch every year?
Salaried individuals can switch every year. Non-salaried (business/profession income) can switch only once in a lifetime — choose carefully.
Does the ₹8 lakh 87A rebate apply automatically?
Yes, under the new regime, if net taxable income is ≤ ₹8 lakh (FY 25-26), the tax payable is reduced to zero via Section 87A.
Run your own numbers
Last updated: 12 Apr 2026