Income tax in India is calculated according to the applicable tax regime, income level, taxpayer category, and tax rules for the relevant financial year.
For FY 2025-26, taxpayers should review the applicable provisions before calculating their final tax liability.
New Tax Regime
The new tax regime uses different income slabs and generally provides fewer deductions and exemptions compared with the traditional regime.
The applicable slab rates, rebate provisions, surcharge, cess, and other rules should be checked for the relevant financial year.
Old Tax Regime
The old tax regime may allow eligible taxpayers to claim various deductions and exemptions, subject to the applicable conditions.
Examples can include:
- Section 80C deductions
- Section 80D deductions
- House Rent Allowance (HRA) exemption where eligible
- Certain home loan benefits
- Other eligible deductions
New Regime vs Old Regime
New Tax Regime
- Simpler structure
- Generally lower slab rates
- Fewer deductions and exemptions
- May be beneficial for taxpayers with fewer eligible deductions
Old Tax Regime
- More deductions and exemptions may be available
- Can be beneficial for taxpayers with significant eligible deductions
- Requires more detailed tax planning
Which Regime Is Better?
There is no single answer for every taxpayer.
The better regime depends on factors such as:
- Total taxable income
- Salary structure
- Home loan
- Investments
- Insurance premiums
- Eligible deductions
- Other sources of income
Taxpayers should calculate their liability under both regimes before making a decision where applicable.
Important
Income tax rates, rebates, deductions, exemptions, and other provisions can change through government notifications and annual budgets.
Always verify the applicable rules for the relevant financial year before filing your return.
Conclusion
Understanding the applicable tax regime can help taxpayers plan their finances more effectively.
For personalised tax planning, taxpayers should consider consulting a qualified tax professional.