Since the new tax regime became the default, every salaried Indian faces the same question at filing time: new regime or old regime? Pick wrong and you could overpay by tens of thousands of rupees. This guide gives you the slab rates, the exact break-even point, and worked examples so you can decide with confidence for FY 2024-25.
New Tax Regime Slabs (FY 2024-25)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3 Lakh | Nil |
| ₹3 – ₹7 Lakh | 5% |
| ₹7 – ₹10 Lakh | 10% |
| ₹10 – ₹12 Lakh | 15% |
| ₹12 – ₹15 Lakh | 20% |
| Above ₹15 Lakh | 30% |
Standard deduction: ₹75,000. Section 87A rebate makes taxable income up to ₹7 lakh tax-free. But you give up almost all deductions — no 80C, 80D, HRA or home loan interest.
Old Tax Regime Slabs (FY 2024-25)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2.5 Lakh | Nil |
| ₹2.5 – ₹5 Lakh | 5% |
| ₹5 – ₹10 Lakh | 20% |
| Above ₹10 Lakh | 30% |
Standard deduction: ₹50,000. You can claim the full range of deductions — 80C (up to ₹1.5L), 80D (health insurance), HRA, LTA, and home loan interest (up to ₹2L under Section 24b).
The Break-Even Point
The simple rule: the old regime wins only if your total deductions exceed roughly ₹3.75 lakh. Below that, the new regime's lower slab rates and bigger standard deduction make it cheaper.
Worked Example — ₹12 Lakh Salary
Under the New Regime
- Taxable income = 12,00,000 − 75,000 = ₹11.25 lakh
- Tax = 0 + ₹20,000 (5% of 3–7L) + ₹30,000 (10% of 7–10L) + ₹18,750 (15% of 10–11.25L) = ₹68,750
- + 4% cess = ₹71,500 total tax
Under the Old Regime (with ₹3 lakh deductions)
- Taxable income = 12,00,000 − 50,000 − 1,50,000 (80C) − 1,00,000 (other) = ₹8.5 lakh
- Tax = ₹12,500 (5% of 2.5–5L) + ₹70,000 (20% of 5–8.5L) = ₹82,500
- + 4% cess = ₹85,800 total tax
Here the new regime saves ₹14,300. But if this person also claimed ₹2 lakh of home loan interest (pushing deductions to ₹5 lakh), the old regime would flip to being cheaper. The exact answer always depends on your deductions.
Don't Guess — Calculate Both
The only reliable way to decide is to compute your tax under both regimes with your real numbers. Our Income Tax Calculator does exactly that — enter your income and deductions, toggle between regimes, and see which one leaves more money in your pocket. You can also check your GST and loan EMIs while you plan your finances.