New Regime (Section 202) vs Old Regime for FY 2026-27
Section 202 of the Income-tax Act 2025 carries forward the concessional 'new tax regime' as the default regime for all individual and HUF taxpayers, with lower slab rates in exchange for foregoing most exemptions and deductions (Section 80C, 80D, HRA, LTA, etc., other than a standard deduction and employer's NPS contribution). Taxpayers with business income must file Form 10-IEA (or the successor form) to opt out of the new regime; salaried taxpayers can choose the regime afresh each year at the time of filing.
The new regime slabs for FY 2026-27 apply progressively: nil tax up to ₹4,00,000, 5% from ₹4,00,001–₹8,00,000, 10% from ₹8,00,001–₹12,00,000, 15% from ₹12,00,001–₹16,00,000, 20% from ₹16,00,001–₹20,00,000, 25% from ₹20,00,001–₹24,00,000, and 30% above ₹24,00,000. A rebate under Section 199 (successor to old Section 87A) makes tax effectively nil for total income up to ₹12,00,000 under the new regime, subject to marginal relief above that threshold.
The old regime retains the pre-2025 slab structure (nil up to ₹2,50,000, 5%/20%/30% slabs) but allows the full basket of deductions — Section 80C (₹1.5 lakh), 80D (health insurance), HRA exemption, home loan interest under Section 24(b), and others — making it more beneficial for taxpayers with significant deduction-eligible investments, home loans, or rent outgo.
This calculator computes both regimes side by side using your actual income and deduction inputs so you can identify the lower-tax option before filing, rather than assuming the new regime default is always optimal.
Worked Example: Salaried Individual, ₹15,00,000 Gross Income
A salaried individual earns ₹15,00,000 gross salary, claims ₹1,50,000 under Section 80C and ₹25,000 under Section 80D (old regime only), and takes the standard deduction under both regimes.
Frequently Asked Questions (FAQs)
Is the new tax regime mandatory for FY 2026-27?
The new regime is the default regime under Section 202, applied automatically unless the taxpayer actively opts for the old regime. Salaried individuals can switch each year at filing time; taxpayers with business income must file the opt-out form to use the old regime and can only switch back once thereafter.
What deductions are still allowed under the new regime?
Primarily the standard deduction (₹75,000 for salaried individuals for FY 2026-27), employer's contribution to NPS under Section 80CCD(2), and a limited set of exemptions such as transport allowance for specially-abled employees. Section 80C, 80D, HRA exemption, and home loan interest deduction (for self-occupied property) are not available under the new regime.
What is the rebate limit under the new regime for FY 2026-27?
Total income up to ₹12,00,000 attracts a rebate that brings the tax liability to nil under the new regime (successor to the old Section 87A rebate), with marginal relief tapering the benefit just above the threshold so tax does not jump disproportionately.
Which regime is better if I have a home loan?
It depends on the loan interest amount and other deductions. The old regime allows deduction of home loan interest under Section 24(b) up to ₹2,00,000 for a self-occupied property, which can make it more beneficial when combined with 80C and 80D claims — this calculator compares both regimes with your actual figures to show which is lower.
Can I switch between old and new regime every year?
Salaried individuals with no business income can choose either regime freely each financial year at the time of filing. Taxpayers with business or professional income can opt out of the new regime only once and, having opted back in, cannot switch again except in the year business income ceases.