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Start With Income Buckets
Separate salary, interest, rent, capital gains and other income before comparing regimes. Each bucket follows its own rules: salary gets a standard deduction, savings and deposit interest is taxed at your slab rate, and gains on listed shares and equity funds have their own rates.
Salary users should also note standard deduction, employer NPS, professional tax and exempt allowances. The standard deduction is ₹75,000 under the new regime and ₹50,000 under the old regime, and it applies only to salary or pension income.
Gains on listed shares and equity mutual funds are long-term only when the units are held for more than 12 months. Long-term gains above ₹1.25 lakh a year are taxed at 12.5% and short-term gains at 20%, separately from your slab.
How The New Regime Works In 2026–27
From 1 April 2026 the Income-tax Act, 2025 uses a single tax year in place of the older financial year and assessment year pair. The new regime remains the default, so if you don't choose, your employer deducts TDS under it.
New-regime slabs on taxable income are nil up to ₹4 lakh, 5% from ₹4 lakh to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above that. A 4% health and education cess is added to the tax.
A rebate of up to ₹60,000 removes the tax when taxable income is ₹12 lakh or less. With the ₹75,000 standard deduction, a salary of up to ₹12.75 lakh with no other income pays no tax. Just above ₹12 lakh, marginal relief stops the tax from exceeding the income above ₹12 lakh.
A Quick Worked Example
Take a salary of ₹15 lakh with no other income. Under the new regime, taxable income is ₹14.25 lakh after the standard deduction. Slab tax is ₹93,750 and cess takes the total to ₹97,500, or about ₹8,125 a month.
Under the old regime, the same person would need roughly ₹5.44 lakh of deductions and exemptions, on top of the ₹50,000 standard deduction, just to match that figure. That is why the comparison matters more than the slab table.
Compare Regimes Early
The new regime is simpler for many salaried users, while the old regime can help when HRA, 80C, 80D, home-loan interest and other deductions are meaningful.
Run both regimes before proof submission and again before filing. Salaried taxpayers without business income can usually choose either regime in the return each year, provided it is filed by the due date, even if the employer used the other regime for TDS.
Keep Proof Clean
Preserve Form 16, rent proof, donation receipts, insurance receipts, interest certificates and AIS/TIS checks.
Download the Annual Information Statement before filing and match bank interest, dividends, share sales and TDS against your own records. Report income even when no TDS was deducted on it.
Use calculators for planning, then verify final values in the official filing utility.
Which Calculator To Use
Use the Income Tax Calculator to compare regimes on full-year income, the TDS Calculator mid-year to see how much tax is left for the remaining salary months, and the ITR Return Calculator near filing to estimate the refund or balance payable after TDS and advance tax.