Overview
The Indian government offers two tax regimes: the traditional Old Tax Regime with various exemptions and deductions, and the simplified New Tax Regime with lower slab rates but no deductions. Choosing the right one depends on your income and investments.
Income Tax Slabs – FY 2025-26
| Income Range (₹) | Old Regime | New Regime |
|---|---|---|
| 0 - 2.5 Lakh | 0% | 0% |
| 2.5 - 5 Lakh | 5% | 5% |
| 5 - 7.5 Lakh | 20% | 10% |
| 7.5 - 10 Lakh | 20% | 15% |
| 10 - 12.5 Lakh | 30% | 20% |
| 12.5 - 15 Lakh | 30% | 25% |
| Above 15 Lakh | 30% | 30% |
Key Differences
- Old Regime: Allows deductions under 80C, 80D, HRA, LTA, etc.
- New Regime: Lower tax rates but no exemptions or deductions.
- Standard Deduction: ₹50,000 in old; ₹75,000 in new (FY 2025-26)
- Rebate under Section 87A: Available under both regimes for eligible incomes.
Which is Better?
If you have significant tax-saving investments like PPF, ELSS, or pay rent (HRA), the Old Regime may be more beneficial. For those who don't claim many deductions, the New Regime offers lower rates and less paperwork.