For millions of salaried Indians, FY 2026-27 brings back the annual tax puzzle: old regime with deductions or new with lower rates? Your choice directly impacts taxes paid and cash in pocket. Factors like salary level, deductions claimed, and lifestyle play a big role.
No major slab revisions this year, but fine-tuned rules on allowances have shifted the balance for many. A regime that saved you money in FY26 might cost more now.
Old regime perks include 80C (ELSS, PPF, EPF), 80D premiums, NPS under 80CCD, HRA exemptions, and housing loan deductions up to ₹2 lakh interest. Slabs: 0% up to ₹2.5L, 5% ₹2.5-5L, 20% ₹5-10L, 30% thereafter.
New regime simplifies: standard deduction ₹75K, no other exemptions mostly. Slabs: 0% to ₹3L, 5% ₹3-6L, 10% ₹6-9L, 15% ₹9-12L, 20% ₹12-15L, 30% over ₹15L. Rebate under 87A up to ₹25K tax-free.
Low deduction claimants (under ₹3L) or high earners above ₹20L often prefer new for its predictability and lower effective rates. Take-home salary rises as employers withhold less TDS.
Heavy deduction users – renting in metros, investing systematically, or servicing loans – stick to old. Example: A ₹15L earner claiming ₹4L deductions pays ~₹1.2L less tax in old vs new.
Fresh FY27 perks: Meal allowance ₹200/day exempt, ₹15K gifts tax-free annually. HRA boost for four cities; education ₹3K/child/month, hostel ₹9K. Transport ₹25K/month free. Vehicle valuation simplified.
File under old by opting out annually; new is default. Budget 2026 eases ITR deadlines to Aug 31 for complex forms. Run scenarios on the Income Tax portal’s calculator to decide.
