New Tax Regime vs Old Tax Regime: Which is Better? [EXCEL]

Difference between New Tax Regime vs Old Tax Regime comes down to your income and investments. If you don’t make any investments, then new tax regime is better for you due to low tax slab rates. And if you make investments and claim deductions on those investments than old tax regime is better for you to pay less income tax on your taxable income. But with new tax regime, there is no tax up to 12 lakh taxable income, which makes new tax regime more attractive without making any investments or claiming deductions.

Let us understand New Tax Regime vs Old Tax Regime in detail.

You can also download the Income Tax Calculator in excel to know the tax liability with Old and New Tax regime:

Table of Contents

New vs Old Tax Regime Video
New Tax Regime vs Old Tax Regime: Which is Better
Old Tax Regime Slab Rates
New Tax Regime Slab Rates
Benefits of Old Tax Regime
Benefits of New Tax Regime
Conclusion
Frequently Asked Questions

New vs Old Tax Regime Video

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New Tax Regime vs Old Tax Regime: Which is Better

As seen in above video, old tax regime is better for you when you make multiple investments and claim deductions that can help you to save income tax. Even if your income is Rs. 11 Lakh in financial year, still you don’t have to pay any tax with old tax regime by effectively using all deduction options available.

Where as, if you do not make any investments, than new tax regime is better since the tax slab rates are reduced in new regime compared to old regime, and there are not many deductions available in new tax regime. Also, from FY 2025-26 onwards, you don’t have to pay any income tax with new tax regime based on Tax Rebate Section 87A benefits – you get maximum tax rebate of Rs. 60,000 with new tax regime

Tax rebate 87A limit for taxable income in old tax regime is Rs. 5 lakh and with new tax regime the limit is Rs. 12 lakh up to which no income tax need to be paid.

So, if your taxable income is up to 12 lakh after removing Standard Deduction of 75,000 with new tax regime, you simply select the new tax regime while filing your ITR (Income Tax Return) with ZERO Income Tax

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Old Tax Regime Slab Rates

Below are the income tax slab rates with old tax regime for age below 60 years:

Income	Tax Slab Rates (Old Tax Regime)
Rs. 0 – Rs. 2.5 Lakh	0%
Rs. 2.5 Lakh – Rs. 5 Lakh	5%
Rs. 5 Lakh – Rs. 10 Lakh	20%
Rs. 10 Lakh or above	30%

Income Tax Slab Rates in India for age up to 60 years (Old Tax Regime)

Tax rebate under Section 87A is applicable with old tax regime when your taxable income is below Rs. 5 lakh in financial year.

You can know more about Tax Slab Rates for Senior Citizens here.

Let us now see the reduced tax slab rates, that is New Tax Regime for age up to 60 years.

New Tax Regime Slab Rates

Income	Tax Slab Rates (New Tax Regime)
Rs. 0 – Rs. 4 Lakh	0%
Rs. 4 Lakh – Rs. 8 Lakh	5%
Rs. 8 Lakh – Rs. 12 Lakh	10%
Rs. 12 Lakh – Rs. 16 Lakh	15%
Rs. 16 Lakh – Rs. 20 Lakh	20%
Rs. 20 Lakh – Rs. 24 Lakh	25%
Rs. 24 Lakh or above	30%

Income Tax Slab in New Tax Regime

Note that the new tax regime slab rates are applicable to all age groups, unlike old tax regime.

Standard Deduction of Rs. 75,000 is available in new tax regime and Tax Rebate is also applicable with new tax regime if your taxable income is less than or equal to Rs. 12 Lakh in financial year.

Benefits of Old Tax Regime

There are multiple benefits available in Old Tax Regime:

Standard Deduction of Rs. 50,000 is available to salaried employees and pensioners, which means this flat deduction should be subtracted from your gross income for tax calculation purpose
You get more deductions under Section 80C, Section 80D, Section 80CCD and many more deductions in this list
No tax to be paid if your taxable income is below Rs. 5 Lakh with the help of Tax rebate under Section 87A
Also, you get the benefit of HRA (House Rent Allowance) if you stay in rented accommodation

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Benefits of New Tax Regime

New tax regime also provides you few benefits in terms of tax calculation:

Standard Deduction of Rs. 75,000 is available to salaried employees and pensioners in new tax regime
The tax slab rates in new regime are low compared to old tax regime, which reduces your income tax, provided that you have to forgo majority of the deductions available in old tax regime
There are few deductions available in new tax regime, such as NPS contribution from employer, Home loan interest component under Section 24(b) if property is let out (rented) and few more new tax regime deduction options available here.

Conclusion

So to summarize, you should select new tax regime only when you will not make investments or claim deductions such as Insurance premiums, PPF (Public Provident Fund), Home Loan EMI payments, ELSS mutual funds, provident fund, etc and when your income is Rs. 12 Lakh or less in a financial year. This will help you to pay less income tax due to reduced tax slab rates in new tax regime.

And if you are going to make multiple investments and claim deductions under various sections, than you need to check with old tax regime tax liability and compare it with lower slab rates new tax regime tax liability

Some more Reading:

Frequently Asked Questions

Is it better to choose new or old tax regime?

If you are not making any investments or claiming deductions, and when your taxable income is Rs. 12 lakh or less in a financial year than new tax regime is better for you. Even with income above 12 lakh, you’ll pay less income tax with new tax regime due to lower tax slab rates compared to old tax regime

What is the difference between old and new regime tax slab?

New tax slab rates are reduced tax slab rates compared to old tax regime. New regime helps you to pay less income tax due to this but you don’t have many options to claim deductions that can help you save more income tax. On the other hand, old tax regime allows you to claim multiple deductions and save income tax even though the tax slab rates are high as mentioned above.

Is 80C not applicable in new tax regime?

No, Section 80C is not applicable in new tax regime. It is only applicable for old tax regime.

Which tax regime is better for 12 lakhs?

New Tax Regime is better for income of 12 lakh in financial year, since your tax liability will be zero without making any investments or claiming deductions

Can I switch between tax regimes?

Yes you can switch between old and new tax regime and vice versa while filing ITR (Income Tax Return).

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Income Tax Calculator App – FinCalC

For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.

What you can do with this mobile App?

Calculate Income Tax for FY 2025-26 and previous FY 2024-25
Enter estimated Investments to check income tax with Old and New Tax Regime
Save income tax details and track regularly
Know how much to invest more to save income tax
More calculators including PPF, SIP returns, Savings account interest and lot more

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