Which Tax Regime Should You Pick?

Every filing season, the same question comes up: old regime or new? The honest answer is — it depends entirely on your deductions, not on which regime sounds newer or simpler.

The new regime trades deductions for lower slab rates

Under Section 115BAC(1A), the new regime offers lower tax rates but strips out most exemptions and deductions — no HRA exemption, no home loan interest deduction on a self-occupied property, no 80C investments (PPF, ELSS, life insurance premium), no 80D health insurance deduction. You get a higher standard deduction and a rebate that makes income up to a threshold tax-free, but that's largely it.

The old regime still wins for high-deduction filers

If you're paying rent and claiming HRA, servicing a home loan, or maxing out 80C and 80D every year, those deductions can shrink your taxable income enough that the old regime's higher slab rates still result in lower actual tax. The only way to know is to compute both.

Run the numbers — don't guess

• List every deduction you actually claim today: HRA, 80C, 80D, home loan interest, NPS (80CCD(1B)), etc.
• Compute tax payable under the old regime with those deductions applied.
• Compute tax payable under the new regime with just the standard deduction.
• Pick whichever number is lower — for salaried employees, this choice can be made fresh each year.

If your deductions add up to a small fraction of your income, the new regime usually wins. If they're substantial — especially with a home loan and full 80C/80D usage — the old regime often still comes out ahead.