The new regime already gives salaried taxpayers a standard deduction of Rs 75,000, while the old regime allows Rs 50,000, as per the Income Tax Department's deductions page. Alongside this, a resident individual with income up to Rs 12 lakh receives a rebate that makes the tax payable nil.
The slabs under the new regime for tax year 2026-27 rise in steps of Rs 4 lakh, from nil up to 30%, so many families find that their tax is already low before any deduction is claimed.
Deductions that tilt the calculation
Some deductions are available only under the old regime and these decide whether it can come out ahead:
- Section 80C investments such as PPF, NSC, life insurance premium and ELSS, up to Rs 1.5 lakh
- Section 80D health insurance premium
- House Rent Allowance (HRA) exemption
- Leave Travel Allowance (LTA) exemption
Under the new regime, none of these four can be claimed.
Two NPS deductions are treated differently. Employer contributions under Section 80CCD(2) remain allowed in the new regime, and the limit is 14% of salary, as per the Income Tax Department. Own contributions under Section 80CCD are deductible up to 10% of salary, subject to conditions and limits.
Salaried individuals whose employers contribute to NPS are therefore finding that a part of the benefit is available under both regimes.
Switching and what to check
Under the Income-tax Act, 2025, salaried individuals can return to the old regime under Section 202(4), which was Section 115BAC(6) earlier. Many taxpayers are therefore comparing both regimes each year, since the choice is not fixed for all time.
Taxpayers with business or professional income follow a separate process and they opt for the old regime by filing Form 10-IEA. The form has to be filed on or before the due date for the return under Section 139(1).
