For FY 2025-26, taxpayers earning ₹15 lakh, ₹25 lakh, and ₹30 lakh face different tax implications under the old and new tax regimes. According to reports from Tax2win, the new regime offers lower slab rates but fewer deductions, while the old regime provides more deductions but higher tax rates. At lower income levels, the old regime may still be beneficial if taxpayers claim sufficient deductions, but for higher earners, the new regime typically results in lower tax liability. The new regime's advantage stems from lower slab rates and the availability of only standard deduction of ₹50,000 versus the old regime's comprehensive deduction structure.
For a ₹15 lakh salary, the old tax regime results in a tax liability of ₹1,24,800 compared to ₹97,500 under the new regime, representing a tax saving of ₹27,300. Under the old regime, taxpayers pay ₹1,00,000 in tax on the ₹10-10.25 lakh slab and ₹7,500 on the ₹10-10.25 lakh slab, while the new regime charges ₹33,750 on the ₹12-14.25 lakh slab. The new regime's advantage stems from lower slab rates and the availability of only standard deduction of ₹50,000 versus the old regime's comprehensive deduction structure.
At higher income levels, the new regime becomes increasingly attractive. For a ₹25 lakh salary, the old regime requires ₹4,36,800 in tax payments compared to ₹3,19,800 under the new regime, resulting in savings of ₹1,16,200. Similarly, for a ₹30 lakh salary, the old regime tax stands at ₹5,92,800 while the new regime tax is ₹4,75,800, leading to savings of ₹1,17,000. These savings are achieved despite the new regime's lower slab rates, as it offers fewer deductions compared to the old regime's comprehensive structure.
The old tax regime provides significant deduction benefits including ₹1.5 lakh under Section 80C for investments like PPF, EPF, ELSS, and home loan principal repayment, ₹2 lakh under Section 24(b) for home loan interest on self-occupied properties, ₹50,000 under Section 80CCD(1B) for NPS contributions, and ₹25,000 under Section 80D for health insurance premiums. According to CA Abhishek Soni from Tax2win, even after claiming common deductions like HRA, Section 80C, NPS, health insurance, and children's education allowance, the new tax regime still results in lower tax liability. However, for taxpayers with significantly higher deductions due to other exemptions and allowances, the old regime may become more beneficial based on their actual deduction claims. Additionally, education loan borrowers can claim Section 80E deduction for the entire interest amount paid on education loans, with no upper limit and available for 8 consecutive assessment years from the first EMI year.
