What is the difference between old and new tax regime?

The old tax regime has higher tax rates but allows deductions under Sections 80C, 80D, 24(b), and HRA exemption. The new tax regime has lower rates but removes most deductions and exemptions. For FY 2026-27, the new regime offers a standard deduction of Rs 75,000 and rebate under Section 87A for income up to Rs 7 lakh.

Which tax regime is better for salaried employees?

If you claim significant deductions (80C investments, 80D health insurance, HRA exemption, home loan interest), the old regime may be better. If you have minimal deductions, the new regime usually results in lower tax. For most salaried employees with total deductions above Rs 3-4 lakh, the old regime is often more beneficial.

What are the new tax regime slabs for FY 2026-27?

New regime slabs: Rs 0 to 4,00,000: nil; Rs 4,00,001 to 8,00,000: 5 per cent; Rs 8,00,001 to 12,00,000: 10 per cent; Rs 12,00,001 to 16,00,000: 15 per cent; Rs 16,00,001 to 20,00,000: 20 per cent; Rs 20,00,001 to 24,00,000: 25 per cent; above Rs 24,00,000: 30 per cent. A standard deduction of Rs 75,000 is available.

What are the old tax regime slabs for FY 2026-27?

Old regime slabs: Rs 0 to 2,50,000: nil; Rs 2,50,001 to 5,00,000: 5 per cent; Rs 5,00,001 to 10,00,000: 20 per cent; above Rs 10,00,000: 30 per cent. A standard deduction of Rs 50,000 is available. Taxpayers can claim deductions under Sections 80C (up to Rs 1.5 lakh), 80D, 24(b) home loan interest (up to Rs 2 lakh), and HRA exemption.

What is the Section 87A rebate?

Section 87A provides a full rebate on tax payable. Under the new regime, if taxable income is up to Rs 7 lakh, your tax is nil. Under the old regime, the rebate applies if taxable income is up to Rs 5 lakh. The rebate is the minimum of tax payable and Rs 25,000 under both regimes.

Can I switch between old and new tax regime every year?

Salaried employees without business income can switch between regimes each financial year. If you have business income, you can switch only once and must file Form 10-IEA to opt back to the old regime. The new regime has been the default since FY 2023-24.

What deductions are allowed under the old tax regime?

Key deductions include: Section 80C (up to Rs 1.5 lakh for PPF, ELSS, life insurance, EPF), Section 80D (health insurance premiums up to Rs 25,000 for self and family, Rs 50,000 for senior citizens), Section 24(b) (home loan interest up to Rs 2 lakh), HRA exemption under Section 10(13A), and standard deduction of Rs 50,000 for salaried employees.

Form 10-IEA is the form that individuals with business income must file to opt out of the new tax regime and return to the old regime. This is a one-time option. Once you file Form 10-IEA and switch back to the old regime, you cannot switch to the new regime again unless you no longer have business income.

How is income tax calculated under the new regime?

Under the new regime, subtract the standard deduction of Rs 75,000 from your gross total income. Apply the slab rates to the resulting taxable income: nil up to Rs 4 lakh, 5 per cent from Rs 4 to 8 lakh, 10 per cent from Rs 8 to 12 lakh, 15 per cent from Rs 12 to 16 lakh, 20 per cent from Rs 16 to 20 lakh, 25 per cent from Rs 20 to 24 lakh, and 30 per cent above Rs 24 lakh. Add 4 per cent health and education cess. If taxable income is up to Rs 7 lakh, Section 87A rebate makes the tax nil.

Which regime is better for income above Rs 15 lakh?

For income above Rs 15 lakh, the old regime typically requires deductions of at least Rs 3 to 4 lakh to be competitive with the new regime. Without substantial deductions (80C, 80D, HRA, home loan interest), the new regime is usually cheaper even at higher income levels because the slab rates cap at 30 per cent in both regimes.

Can NRI investors use this old vs new tax regime calculator?

Yes. This calculator works for NRI taxpayers as well. NRIs are subject to the same tax slab rates as residents for income earned or received in India. The currency selector converts amounts to USD, EUR, GBP, and other currencies for convenience. NRI taxation rules under Section 115A through 115F may also apply to specific investment incomes.

What is the meaning of old vs new tax regime?

The old tax regime is the traditional income tax system with higher slab rates but multiple deductions and exemptions (80C, 80D, HRA, home loan interest). The new tax regime, introduced in Budget 2020 and made the default from FY 2023-24, offers lower slab rates but eliminates nearly all deductions and exemptions except the standard deduction of Rs 75,000.

Fermor is a financial platform built for India. The calculators are the distribution layer: free tools that give real answers to real financial questions, with no sign-up required. The product being built is an automated financial action system that uses the Account Aggregator framework to connect real financial accounts and close the gap between knowing what you should do with your money and actually doing it. Fermor is not a comparison site or a content platform. The calculators earn trust. The action platform is the product.

Old vs New Tax Regime Calculator: Compare Tax Liability FY 2026-27 | Fermor

What Is the Old vs New Tax Regime?

The old vs new tax regime refers to India two parallel income tax systems: the old regime with higher tax rates but full access to deductions and exemptions, and the new regime with lower slab rates but minimal deductions introduced in Budget 2020 and made the default from FY 2023-24.

Under the old regime, salaried employees can claim deductions under Section 80C (PPF, ELSS, EPF, life insurance), Section 80D (health insurance), HRA exemption under Section 10(13A), and home loan interest under Section 24(b). The standard deduction is Rs 50,000.

Under the new regime, slab rates are significantly lower but most deductions are eliminated. The standard deduction of Rs 75,000 is the only major deduction available. Section 87A provides a full rebate for taxable income up to Rs 12 lakh under the new regime from FY 2025-26, making tax nil for that bracket.

Old vs New Tax Regime Comparison Table

The table below shows the income tax slab rates under both regimes for FY 2026-27.

Income tax slab comparison for FY 2026-27
Income Slab	New Regime Rate	Old Regime Rate
Rs 0 to Rs 2,50,000	0%	0%
Rs 2,50,001 to Rs 4,00,000	0%	5%
Rs 4,00,001 to Rs 5,00,000	0%*	5%
Rs 5,00,001 to Rs 8,00,000	5%	20%
Rs 8,00,001 to Rs 10,00,000	10%	20%
Rs 10,00,001 to Rs 12,00,000	10%	30%
Rs 12,00,001 to Rs 16,00,000	15%	30%
Rs 16,00,001 to Rs 20,00,000	20%	30%
Rs 20,00,001 to Rs 24,00,000	25%	30%
Above Rs 24,00,000	30%	30%

* Section 87A rebate makes tax nil for taxable income up to Rs 12,00,000 under the new regime (FY 2025-26 onwards) and Rs 5,00,000 under the old regime. Marginal relief applies just above the threshold. Standard deduction: Rs 75,000 (new) / Rs 50,000 (old).

Which Tax Regime Saves More for You?

The answer depends entirely on how much you can claim as deductions. If your total deductions under Sections 80C, 80D, HRA exemption, home loan interest, and other eligible items exceed approximately Rs 3-4 lakh, the old regime is likely better. For employees with minimal deductions, the new regime is simpler and cheaper.

Scenario 1: Rs 12 lakh annual income with Rs 2 lakh in deductions. Old regime tax is approximately Rs 1.05 lakh. New regime tax is approximately Rs 60,000 (after standard deduction). New regime saves Rs 45,000.

Scenario 2: Rs 18 lakh annual income with Rs 4.5 lakh in deductions. Old regime tax is approximately Rs 2.1 lakh. New regime tax is approximately Rs 2.5 lakh. Old regime saves Rs 40,000.

Old Regime Tax Calculation Formula

Taxable Income = Gross Income minus Standard Deduction (Rs 50,000) minus Section 80C (max Rs 1,50,000) minus 80D minus HRA exemption minus Section 24(b) minus Other Deductions

Apply the old regime slab rates to the taxable income. If taxable income is Rs 3,00,000 to Rs 5,00,000, the tax is 5 per cent of the amount above Rs 2,50,000. From Rs 5,00,001 to Rs 10,00,000, it is 20 per cent of the amount above Rs 5,00,000 plus Rs 12,500. Above Rs 10,00,000, it is 30 per cent of the amount above Rs 10,00,000 plus Rs 1,12,500. Add 4 per cent cess on the total tax.

New Regime Tax Calculation Formula

Taxable Income = Gross Income minus Standard Deduction (Rs 75,000)

Apply the new regime slab rates: nil up to Rs 4,00,000, 5 per cent from Rs 4,00,001 to Rs 8,00,000, 10 per cent from Rs 8,00,001 to Rs 12,00,000, 15 per cent from Rs 12,00,001 to Rs 16,00,000, 20 per cent from Rs 16,00,001 to Rs 20,00,000, 25 per cent from Rs 20,00,001 to Rs 24,00,000, and 30 per cent above Rs 24,00,000. Add 4 per cent cess. If taxable income is Rs 12,00,000 or less, tax is nil under the new regime due to Section 87A rebate (FY 2025-26 onwards).

Section 87A Rebate Explained

Section 87A of the Income Tax Act provides a rebate that reduces the tax payable to zero for taxpayers below certain income thresholds. Under the new regime from FY 2025-26, tax is nil if taxable income is up to Rs 12,00,000 (the full rebate is up to Rs 60,000, and marginal relief applies just above this threshold). Under the old regime, the rebate threshold remains Rs 5,00,000.

For a salaried employee, the Rs 75,000 standard deduction under the new regime means someone with gross salary up to Rs 12,75,000 pays zero income tax. If your taxable income is slightly above Rs 12 lakh, marginal relief limits your tax to the excess over Rs 12 lakh rather than the full slab tax, preventing a cliff effect.

Use this Income Tax Calculator for a more detailed breakdown including cess and marginal relief calculations.

How to Switch Between Tax Regimes

Switching between regimes depends on your income type. Salaried employees without business or professional income can switch freely between the old and new regime every financial year. You simply choose the regime at the time of filing your income tax return (ITR) that gives you the lower tax liability.

If you have business or professional income, you can opt for the new regime and switch back to the old regime only once in your lifetime. To switch back, you must file Form 10-IEA before the due date of filing your ITR for that assessment year. Once you switch back, you cannot opt for the new regime again.

The new regime has been the default regime since FY 2023-24. If you want the old regime, you must explicitly opt for it by selecting it in your ITR form or informing your employer for TDS calculation purposes.

Key Deductions Under the Old Tax Regime

The old regime allows these major deductions that can significantly reduce your taxable income:

Key deductions available under the old tax regime
Section	Maximum Deduction	Common Investments
Section 80C	Rs 1,50,000	PPF, ELSS, EPF, life insurance, tax-saving FD, NSC
Section 80D	Rs 25,000 (self) / Rs 50,000 (senior)	Health insurance premiums
Section 24(b)	Rs 2,00,000	Home loan interest on self-occupied property
Section 10(13A)	Depends on rent paid	HRA exemption for rented accommodation
Section 80E	No limit	Education loan interest (8 years)
Section 80G	50% or 100% of donation	Charitable donations to approved funds

Tax Regime for NRI Taxpayers

NRI taxpayers in India are subject to the same income tax slab rates as resident individuals for income earned or received in India. The choice between old and new regimes applies to NRIs as well. However, specific provisions under Sections 115A through 115F may provide concessional tax rates for certain types of investment income earned by NRIs.

NRI income from NRE account interest is tax-free in India. NRO account interest is taxable. Capital gains from the sale of Indian assets are taxed at applicable rates. NRIs should carefully evaluate which regime works better given their specific income composition and available deductions.

The multi-currency selector in this calculator converts all amounts to USD, EUR, GBP, or other currencies, making it easier for NRI users to understand their Indian tax liability in their resident currency. Use the In-Hand Salary Calculator to compute your actual take-home pay after tax deductions.

How to Use This Tax Regime Calculator

Enter your annual income: enter your gross total income from salary for the financial year.
Add 80C and 80D: enter your Section 80C investments (PPF, ELSS, EPF) and Section 80D health insurance premiums.
More details: click More settings to enter HRA exemption, home loan interest, and other deductions.
Compare: the result panel shows your tax under both regimes side by side with the winner highlighted.

Click any input value to type a precise number. Use the currency selector to view amounts in USD, EUR, GBP, or other currencies. All calculations include the applicable Section 87A rebate and 4 per cent health and education cess.

Frequently Asked Questions

If your total deductions (80C, 80D, HRA, home loan interest, etc.) exceed approximately Rs 3-4 lakh, the old regime typically saves more tax. Otherwise, the new regime with its lower rates is usually better. Use this calculator to compare both regimes with your specific numbers.

Disclaimer: All calculations on this page are indicative only. Tax liability depends on individual circumstances, applicable exemptions, and specific provisions of the Income Tax Act. This calculator is for educational and planning purposes only and does not constitute financial advice. Consult a SEBI-registered investment adviser or a qualified chartered accountant before making tax decisions.

Income Tax Breakdown by Salary Level

Each guide below has a complete slab-by-slab computation, old vs new regime comparison, and monthly in-hand salary for that specific salary level.

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