Income Tax · 6 min read
Old vs New Tax Regime (AY 2026-27): Which One Saves You More?
By the India Law Simplified editorial team · Verified against primary government sources (bare Acts & official portals) · Last updated 2026-06-01
Since the new regime under Section 115BAC is the default, many salaried people overpay simply by not checking. The right choice depends entirely on how many deductions you actually claim.
1The core trade-off
The new regime has lower slab rates but removes most deductions. The old regime has higher rates but lets you claim 80C, 80D, HRA, home-loan interest (24b) and more. So the old regime wins only if your total deductions are large enough to offset its higher rates.
2Choose the NEW regime if…
- You have few or no investments/deductions.
- You don't claim HRA or a home-loan interest benefit.
- You prefer simplicity and a higher standard deduction.
3Choose the OLD regime if…
- You fully use 80C (₹1.5 lakh), 80D, and HRA.
- You pay significant home-loan interest under Section 24(b).
- Your combined deductions are large relative to income.
4How to decide in 2 minutes
Use a regime calculator (we have a free one on the Tax & GST page): enter your salary and deductions and compare the tax both ways. Salaried taxpayers can choose the better regime each year. Always verify current slabs and the Section 87A rebate against the latest Finance Act.
Frequently asked questions
Which tax regime is default in AY 2026-27?
The new regime under Section 115BAC is the default. You must explicitly opt for the old regime if it benefits you.
Can I switch between regimes every year?
Salaried individuals without business income can generally choose afresh each year. Those with business income face more restrictions on switching back.
Does the new regime allow 80C?
No. The new regime does not allow most deductions like 80C and 80D, but offers lower slab rates and a higher standard deduction.
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Income-tax regime calculator · Form 16 → ITR computation
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