SalaryDecode

Updated for FY 2026-27

Old vs New Tax Regime Calculator (FY 2026-27)

Pre-filled at the ₹1,50,000 cap as a common maximum — replace it with your actual ELSS/PPF/life-insurance total. Your employee PF contribution is counted toward the cap automatically; don't include it here.

New regimeOld regime
Gross cash salary₹11,55,323₹11,55,323
Standard deduction− ₹75,000− ₹50,000
HRA exemption §10(13A)—₹0
Professional tax §16(iii)—− ₹2,400
§80C (incl. employee PF)—− ₹1,50,000
Taxable income₹10,80,323₹9,52,923
Tax at slab rates₹48,032₹1,03,085
After §87A rebate₹0₹1,03,085
Surcharge₹0₹0
Health & education cess (4%)₹0₹4,123
Total income tax₹0₹1,07,208

The new regime results in ₹1,07,208 lower tax in this calculation.

The comparison depends entirely on the inputs entered above. Deductions not yet modeled here: §80D health insurance premiums, §80CCD(1B) NPS contributions, §24(b) home-loan interest, §80G donations, and LTA — if any of these apply, the old-regime tax shown is higher than what a full computation would give.

Estimate only. Not tax or financial advice. Figures depend on your employer's exact structure — consult a CA for decisions. Updated for FY 2026-27.

One input set, both regimes, full working

Every year the same question lands on the investment-declaration form: old regime or new? Most comparison tools print two final numbers and stop. This one shows the complete computation for both regimes side by side — which deductions each regime allows, the taxable income after them, tax at slab rates, the §87A rebate, surcharge, and cess — so the difference is traceable line by line rather than taken on faith. The CTC is decomposed into the same standard structure our in-hand salary calculator uses (basic at 40%, HRA at 50%/40% of basic), so figures are consistent across the tools on this site.

The regimes differ in two opposite ways. The new regime — the default under §115BAC — has wider slabs, a ₹75,000 standard deduction, and a §87A rebate that zeroes tax up to ₹12,00,000 of taxable income, but allows almost nothing else. The old regime keeps the pre-2020 slabs (5% from ₹2.5L, 20% from ₹5L, 30% from ₹10L) and a smaller ₹50,000 standard deduction, but admits the deduction basket: §80C up to ₹1,50,000, the HRA exemption, professional tax, and more. The comparison is therefore genuinely input-dependent — the new regime's structural advantage against the deductions you can actually claim.

Worked example — ₹12 lakh CTC in Karnataka

Take the calculator's default: ₹12,00,000 CTC, Karnataka, metro, ₹1,50,000 of §80C investments, no rent. The standard structure gives a gross cash salary of ₹11,55,323. Under the new regime, taxable income is ₹10,80,323 after the ₹75,000 standard deduction; slab tax of ₹48,032 is fully absorbed by the §87A rebate, and the tax is zero. Under the old regime, subtracting the ₹50,000 standard deduction, ₹2,400 professional tax, and the full ₹1,50,000 of §80C leaves ₹9,52,923 taxable — ₹1,03,085 of slab tax plus cess, or ₹1,07,208. Adding ₹2,40,000 of annual rent exempts ₹1,92,000 of HRA and brings the old-regime figure down to ₹67,272 — still far from zero. At this income the rebate does the heavy lifting, and no realistic deduction pile catches up.

When the old regime comes out lower

The picture changes at higher incomes, where the new regime's rebate is long gone and the deduction basket bites at the 30% marginal rate. At ₹35,00,000 CTC in a metro with ₹12,00,000 of annual rent and full §80C, the HRA exemption reaches ₹7,00,000 — the 50%-of-basic ceiling — and the old regime computes to ₹5,87,712 against the new regime's ₹6,04,061: the old regime results in ₹16,349 lower tax in that calculation. The pattern behind it: rent is the only modeled deduction that scales with income (up to half of basic), while §80C stops at ₹1,50,000. Broadly, old-regime arithmetic starts competing when total deductions clear roughly ₹8,00,000 a year — territory reached mainly through large HRA claims, and more easily once home-loan interest or NPS (not yet modeled here) join in.

What this tool models — and what it leaves out

Modeled: both standard deductions, the full slab-rebate-surcharge-cess pipeline for each regime including the §87A marginal relief the official Basic Calculator omits, professional tax by state (deductible u/s 16(iii) in the old regime only), the §80C cap with your employee PF counted automatically, and the Rule 2A HRA exemption from your rent. Not modeled: §80D, NPS under §80CCD(1B), §24(b) home-loan interest, §80G, and LTA — listed in the note under the results because their absence biases the comparison against the old regime for people who have them. The output is an estimate for education, not a filing computation: the HRA exemption calculator breaks down the rent limb in detail, and the CTC offer comparison puts two different offers side by side when the question is a job switch rather than a regime election. Like every tool here, this one runs entirely in your browser — nothing you enter is transmitted or stored.

Frequently asked questions

Why does this calculator show much lower tax than the official Basic Calculator just above ₹12 lakh?
Because we apply the §87A marginal-relief proviso and the Income Tax Department's Basic Calculator omits it. Under the new regime, the proviso caps tax payable at the amount by which taxable income exceeds ₹12,00,000. At ₹13,00,000 gross salary, the Basic Calculator shows ₹66,300; the proviso limits it to ₹25,000 plus cess = ₹26,000, which is what this tool returns. The relief tapers out around taxable income of ₹12,70,588, above which normal slab tax is already the smaller figure. We have verified our other outputs against the official calculator at ₹8L, ₹12.75L, ₹25L and ₹55L — this zone is the one place they diverge, and the proviso is on our side.
Which deductions does this comparison not include?
The old-regime column models the standard deduction (₹50,000), professional tax u/s 16(iii), the §80C basket capped at ₹1,50,000 (your employee PF is auto-counted), and the §10(13A) HRA exemption from your rent. Not yet modeled: §80D health insurance premiums, §80CCD(1B) NPS contributions (up to ₹50,000), §24(b) home-loan interest (up to ₹2,00,000 on self-occupied property), §80G donations, and LTA. If any of these apply, the real old-regime tax is lower than shown here, so the comparison understates the old regime's case for people with those deductions.
Can I switch between the regimes every year?
Salaried taxpayers without business income can pick either regime each assessment year when filing the return, regardless of what they told their employer for TDS. The employer-declared choice only affects monthly TDS; the final regime is settled in the return, and any excess TDS comes back as a refund. Taxpayers with business or professional income face a stricter rule: they can move out of the new regime and back essentially once (Form 10-IEA applies).
Why is the new regime the default?
Since FY 2023-24 the new regime under §115BAC is the default: if a salaried taxpayer does nothing, employers deduct TDS on new-regime slabs and the return is processed on them too. Claiming old-regime deductions requires actively opting for the old regime. The Finance Act 2025 structure carried into FY 2026-27 — a ₹75,000 standard deduction, wider slabs, and the ₹60,000 §87A rebate that zeroes tax up to ₹12,00,000 of taxable income — was designed to make the default attractive at most salary levels.
Why does ₹1 of extra income cost ₹13,000 under the old regime near ₹5 lakh?
The old regime's §87A rebate of ₹12,500 applies only while taxable income is at or below ₹5,00,000, and unlike the new regime it has no marginal-relief proviso — the cliff is real law. At taxable income of exactly ₹5,00,000 the rebate wipes out the ₹12,500 slab tax and nothing is payable; at ₹5,00,001 the rebate vanishes entirely and ₹12,500 plus 4% cess = ₹13,000 becomes due. The new regime's rebate limit (₹12,00,000 taxable) does carry marginal relief, so it has no comparable cliff.
Does paying rent reduce tax under the new regime?
No. The §10(13A) HRA exemption exists only under the old regime; the new regime taxes the full HRA component along with the rest of salary, whatever your rent. This is why high rent in a metro is the single input most capable of flipping this comparison in the old regime's favour — it can exempt up to 50% of basic, an amount no other modeled deduction reaches. Enter your annual rent above and the working shows exactly how much exemption Rule 2A allows for your numbers.

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