Old vs New Tax Regime Calculator

It depends entirely on how many deductions you can claim. Under the new regime, income up to ₹12 lakh is effectively tax-free due to the Section 87A rebate, and salaried employees get a ₹75,000 standard deduction on top, pushing that to ₹12.75 lakh. If your total deductions (80C, 80D, HRA, home loan interest) stay below roughly ₹3.5-4 lakh a year, the new regime usually wins. If you have a home loan, pay high rent, and max out 80C and 80D, the old regime can still save more, especially above ₹15-18 lakh income. Run both numbers through this calculator with your real figures rather than relying on a general rule.

Yes, but through a rebate, not a slab change. Tax is first calculated using the new regime slabs, which does produce some tax on income between ₹4 lakh and ₹12 lakh. Section 87A then applies a rebate of up to ₹60,000, which cancels that tax out completely for taxable income up to ₹12 lakh. For salaried individuals, the ₹75,000 standard deduction is subtracted first, so a gross salary up to ₹12.75 lakh results in zero tax. Cross ₹12 lakh taxable income and the rebate disappears, but marginal relief prevents a sudden jump so you only pay tax on the amount above ₹12 lakh.

Marginal relief stops a small increase in income from causing a disproportionately large tax bill right at the ₹12 lakh rebate cutoff. Without it, someone earning ₹12.1 lakh would suddenly owe roughly ₹61,500 in tax, an increase far bigger than the ₹10,000 extra they earned. Marginal relief caps the tax at exactly the amount of income above ₹12 lakh, so in this example the tax is capped at ₹10,000. This tapers off as income rises further, and by around ₹12.75-13 lakh the full slab-rate tax applies with no relief left.

Most of the deductions people are used to claiming disappear under the new regime. That includes Section 80C (PPF, ELSS, life insurance premiums), Section 80D (health insurance premiums), HRA exemption, home loan interest under Section 24(b) for a self-occupied property, and LTA. A short list still survives: the standard deduction of ₹75,000 for salaried individuals and pensioners, and the employer's contribution to NPS under Section 80CCD(2), which is not affected by which regime you choose.

Salaried individuals and pensioners with no business income can switch regimes every single year when filing their ITR, simply by picking whichever is cheaper for that year. If you have income from business or profession, the rule is stricter: you can switch from new to old only once in your lifetime, and once you switch back to new, you cannot return to old again as long as you have business income. This asymmetry is worth knowing before assuming you can flip back and forth freely.

No. This calculator estimates tax on regular salary or business income taxed at slab rates under both regimes. Capital gains from equity, mutual funds, or property, along with lottery winnings and certain other special-rate incomes, are taxed separately at their own fixed rates in both regimes and are not covered here. If a meaningful part of your income comes from capital gains, treat that portion separately and use this tool only for your regular slab-rate income.

Section 80C caps the deduction at ₹1.5 lakh per year, regardless of how much more you invest in eligible instruments like PPF, ELSS, EPF, or life insurance premiums. At the 30% tax slab, fully using this deduction saves ₹45,000 a year in tax; at the 20% slab it saves ₹30,000. This deduction is available only under the old regime. Investing beyond ₹1.5 lakh in 80C instruments still makes sense for your financial goals, but it stops giving any additional tax benefit under this specific section.

For most people earning up to roughly ₹12-13 lakh with average deduction levels, yes, the new regime tends to win simply because the ₹12.75 lakh effective tax-free threshold for salaried employees is hard to beat with typical 80C, 80D, and HRA claims. The exception is someone with unusually high deductions relative to their income, such as a large home loan interest payment combined with high rent and full 80C usage. Below ₹7-8 lakh income, the gap in deductions rarely matters much because the new regime rebate already brings tax close to zero either way.

Age matters only in the old regime. Individuals below 60 get a basic exemption of ₹2.5 lakh, senior citizens aged 60-80 get ₹3 lakh, and super senior citizens above 80 get ₹5 lakh, all before any tax applies. The new regime does not offer any of these age-based exemptions; everyone, regardless of age, uses the same ₹4 lakh basic exemption and identical slab rates. This is one reason many senior citizens with moderate pension income and some fixed deposit interest still find the old regime more favourable.

Surcharge applies once taxable income crosses ₹50 lakh, at 10% between ₹50 lakh-1 crore, 15% between ₹1-2 crore, and 25% above ₹2 crore under both regimes. The difference appears above ₹5 crore: the old regime charges a 37% surcharge, while the new regime caps the maximum surcharge at 25% regardless of how high income goes. This cap is one of the reasons very high earners increasingly find the new regime attractive even with fewer deductions available. This calculator applies these rates as an estimate; consult a CA for exact figures above ₹5 crore, since marginal relief on surcharge adds further nuance.

Employer contributions to NPS under Section 80CCD(2) are deductible in both the old and new regimes and do not affect which regime wins, since both sides get the same benefit. This calculator does not ask for it separately for that reason. What it does ask for is your own additional voluntary NPS contribution under Section 80CCD(1B), up to ₹50,000, which is available only in the old regime and is a separate field in the deductions section above.