Old vs New Regime

Compute taxable income separately under both regimes. Old regime: deduct HRA, Section 80C (Rs 1.5 lakh), 80D, 24(b) home loan interest (up to Rs 2 lakh), standard deduction Rs 50,000 and other applicable deductions; apply slabs 5/20/30%. New regime: deduct only Rs 75,000 standard deduction and 80CCD(2) employer NPS; apply revised slabs 5/10/15/20/25/30%. Apply 87A rebate (Rs 12,500 old; Rs 60,000 new) where eligible. Add 4% cess. Compare totals. For salaried employees with rent and home loan, old often wins. For young professionals with no major deductions, new almost always wins. Always run both before opting on Form 10-IEA.

You lose most popular ones: Section 80C (PF, PPF, ELSS, life insurance, school fees, principal on home loan), Section 80D (health insurance), Section 80E (education loan interest), Section 80G (donations), Section 80TTA/TTB (savings interest), Section 24(b) for self-occupied property, HRA exemption, LTA exemption, professional tax deduction, and entertainment allowance. What survives in the new regime: Rs 75,000 standard deduction (salaried), Section 80CCD(2) employer NPS contribution (capped at 14% basic + DA), Section 80CCH (Agniveer fund), home loan interest on let-out property (against rent only), and NPS Vatsalya. The trade-off is wider lower-rate slabs that compensate for lost deductions at most income levels.

The breakeven depends heavily on the deductions you actually claim under the old regime. For someone using only the Rs 50,000 standard deduction, new regime is better at every income level. For a salaried person claiming Rs 1.5 lakh under 80C plus standard deduction (total Rs 2 lakh), new beats old above roughly Rs 7-7.5 lakh. With 80C + 80D + 24(b) (combined deductions of Rs 4-4.5 lakh), old regime stays competitive up to Rs 15-17 lakh. With heavy HRA and home loan (Rs 5 lakh+ deductions), old can win even at Rs 25 lakh. There's no universal answer; calculate both with your own numbers.

Yes. Salaried individuals (without business or professional income) can switch between old and new regimes every financial year by indicating their choice at the start of the year to the employer for TDS, and confirming during ITR filing. The default from FY 2023-24 onwards is the new regime; you must actively opt out by submitting Form 10-IEA before the ITR due date if you want to choose the old regime. For taxpayers with business or professional income, the option to switch back to old regime is once-in-a-lifetime; once they exit the new regime, they can return to it but only one such switch is allowed.

Yes, this is one of the surviving deductions in the new regime. Section 80CCD(2) allows deduction for employer's contribution to NPS Tier-I, capped at 14% of basic + DA for both private and government employees under the new regime (from FY 2024-25 onwards). Earlier, the cap was 10% for private and 14% for government; the new regime now harmonised it at 14% for all. So if your basic + DA is Rs 6 lakh and your employer contributes 10%, that Rs 60,000 is fully deductible from your taxable income under the new regime. Section 80CCD(1B) (the additional Rs 50,000 for self-contribution) is, however, lost in the new regime.

Rough rule of thumb: take total income, deduct Rs 75,000 (new regime standard), compute tax under new slabs. Then under old, you need deductions large enough so that tax on (income minus deductions) at old slabs equals or undercuts the new regime tax. For income of Rs 15 lakh, you typically need around Rs 4.25 lakh of total deductions for old to equal new (HRA, 80C, 80D, 24(b) and standard combined). For Rs 10 lakh, Rs 2.5-3 lakh of deductions does the job. For Rs 7.5 lakh, hard to beat new regime at all due to the generous Rs 60,000 87A rebate. Always run actual numbers.

HRA is one of the biggest swing factors. A Mumbai professional paying Rs 35,000 per month rent on a basic of Rs 6 lakh might enjoy roughly Rs 3 lakh of HRA exemption under the old regime, lost entirely under the new regime. That single deduction can shift Rs 60,000-90,000 of tax in favour of the old regime. Conversely, someone living in their own house has zero HRA to lose, so the new regime's lower slabs win comfortably. So the high-rent salaried in metros usually stay in the old regime, while homeowners and small-town employees almost always benefit from the new. Run your own numbers; this is too important to guess.