Old vs New Tax Regime Calculator

The slab-by-slab working

This is the part most calculators hide. Indian income tax is a marginal system: the 30% rate applies only to the rupees above the threshold, never to your whole income. Here is exactly where every rupee of your tax came from.

How the two regimes actually differ

From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act. The rules are substantially the same but every section number changed, and the "assessment year" is gone — FY 2026-27 is now simply tax year 2026-27. The ones you are most likely to meet:

You probably know it as	Under the 2025 Act	What it covers
Section 80C	Section 123	PF, PPF, ELSS, life insurance, tuition, home loan principal
Section 80CCD(1B)	Section 124	Additional NPS contribution
Section 80D	Section 126	Health insurance premium
Section 24(b)	Section 22	Home loan interest
Section 87A	Section 156	The rebate that makes ₹12 lakh tax-free
Section 115BAC	Section 202	The new tax regime itself

If your employer's HR or your accountant still says "80C", they mean exactly the same thing — the limits did not move, only the numbers. Mapping taken from the Institute of Chartered Accountants of India's published table of the two Acts.

The new regime is the default. If you do nothing, you are taxed under it. To use the old regime you must actively opt in, and a salaried person must tell their employer at the start of the year so that TDS is deducted correctly.

The trade

The new regime gives you wider slabs, lower rates and a large rebate, but takes away almost every deduction. The old regime gives you narrow slabs and a 30% rate that starts at just ₹10 lakh, but lets you subtract section 123 (old 80C), section 126 (old 80D), home loan interest, HRA and NPS first.

So the question is never "which regime is better" in the abstract. It is: are my deductions large enough to outweigh the worse slab structure? For most salaried people the answer is no, which is why the new regime wins in the majority of cases. It changes for people paying a large home loan while also renting, or those maxing out every available deduction.

The rate cards side by side

Why ₹12.75 lakh is tax-free — and what happens at ₹12.01 lakh

Under section 156(2), if your total income is ₹12,00,000 or less, a rebate of up to ₹60,000 wipes out your tax entirely. Add the ₹75,000 standard deduction that every salaried person gets, and a salary of ₹12,75,000 produces a tax bill of exactly nothing.

Cross that line and the rebate disappears — which would be brutal, because the slab tax at ₹12,10,000 is ₹61,500. Earning ₹10,000 more would cost you ₹61,500. So the law provides marginal relief: your tax can never exceed the amount by which your income exceeds ₹12,00,000. At ₹12,10,000 you pay ₹10,000 plus cess, not ₹61,500. The relief tapers off and stops mattering around ₹12,75,000 of total income.

Surcharge, and the 25% cap that moved the wealthy

Above ₹50 lakh of total income, a surcharge is charged on your tax, not your income: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and — in the old regime only — 37% above ₹5 crore. The new regime caps surcharge at 25%. For someone earning several crore, that cap alone drops the top effective rate from about 42.7% to about 39%, and it is the single biggest reason high earners switched.

Marginal relief applies at each surcharge threshold too, on the same principle: crossing a threshold can never cost you more in tax than the extra income you earned.

The 4% cess nobody mentions

Health and Education Cess of 4% is charged on tax plus surcharge, in both regimes, with no exemption and no marginal relief. On a ₹2.5 lakh tax bill that is ₹10,000. Any calculator that omits it is understating your liability, which is why it is on every line above.

Working out your HRA exemption

The field above asks for the exempt portion of HRA, which trips people up. The exemption is the lowest of these three:

• The actual HRA you receive from your employer;
• Rent paid minus 10% of your basic salary (plus dearness allowance, if any);
• 50% of basic if you live in Delhi, Mumbai, Kolkata or Chennai — 40% everywhere else.

If you pay more than ₹1,00,000 of rent in a year you must report your landlord's PAN. And HRA exemption is an old-regime benefit only — under the new regime it does not exist.

Switching regimes: the rule that catches business owners

A salaried person with no business income may choose again every single year, at the time of filing. If your circumstances change — you take a home loan, your child's tuition starts — you simply switch.

Someone with income from business or a profession does not get that freedom. They may move from the new regime to the old once in a lifetime, by filing Form 10-IEA before the return due date, and having gone back they may return to the new regime only once more. After that the choice is locked. If you run a business, model this properly before you switch — it is not a decision you get to revisit annually.

What this calculator does not cover

• Senior citizens (60+) and super-senior citizens (80+), who get higher basic exemption limits of ₹3,00,000 and ₹5,00,000 under the old regime.
• Capital gains, which are taxed at their own rates outside the slab system.
• Employer NPS contribution under section 124 (old 80CCD(2)), which is allowed in the new regime — up to 14% of basic. If your employer offers it, the new regime looks even better than shown here.
• Relief under section 157 (old 89) for arrears, and losses carried forward.

These are exactly the cases where a fifteen-minute conversation beats a calculator. Message us on WhatsApp and we will work it out with your actual figures.