Old vs New Tax Regime: Which Should You Pick?
The new regime offers lower slab rates but strips out almost every deduction. The old regime keeps 80C, HRA, and the rest but taxes you at higher rates. Which one wins depends entirely on how much you actually claim. This calculator finds your personal break-even point instead of giving you a generic rule of thumb.
There is no universal answer, and that is the point
Every article promising that one regime is better for a given salary is guessing at the variable that actually decides it. Income sets the slab, but deductions set the outcome. Two people earning identically can land on opposite sides depending on whether they rent, hold a home loan, and genuinely use their 80C limit.
The break-even is the deduction total at which both regimes produce the same liability. Below it the new regime wins on its lower rates; above it the old regime wins because the deductions are worth more than the rate difference. Your job is to work out honestly which side of that line you sit on.
Claimed, not claimable
The commonest error is entering the deductions you could theoretically claim rather than the ones you actually will. A full 80C limit assumes you genuinely invest that amount and can evidence it. HRA assumes you pay rent, have a rent agreement, and can produce the landlord PAN where required.
People routinely choose the old regime on the strength of deductions they then fail to substantiate at filing, and end up worse off than the new regime would have left them. Enter what you will actually claim and can actually prove.
What the old regime keeps that the new one does not
The old regime retains HRA exemption, 80C, health insurance premium relief, home loan interest deduction on a let-out or self-occupied property, education loan interest, and the rest of the familiar set. For a salaried person renting in a metro while servicing a home loan, those can add up to a substantial figure.
The new regime removes nearly all of them in exchange for lower rates and a higher basic exemption. Its real advantage is not only arithmetic — it is that filing becomes simple, with nothing to document and nothing to defend.
A decision you revisit annually
Salaried taxpayers can generally switch between regimes each year, so this is not a permanent commitment. It is worth rerunning whenever your circumstances change: taking or clearing a home loan, moving between renting and owning, or a significant change in income.
Slabs, thresholds and the deductions available are revised between budgets. Confirm the current year rules before filing, and for anything material take advice from a qualified tax professional rather than from a calculator — including this one.