Old vs New Tax Regime: What Should You Check Before Filing ITR?

Every taxpayer in India must choose between two tax regimes before filing an income tax return: the old regime and the new regime. The new regime is now the default option for most individuals, HUFs, AOPs and BOIs. This means if you do nothing, your tax will be calculated under the new regime. If the old regime works out better for you, you have to actively choose it while filing.

Old vs New Tax Regime: A Quick Comparison

The old regime allows various deductions and exemptions, while the new regime offers lower tax rates but permits only limited deductions and exemptions. There is no single answer for which regime is better. It depends on comparing both, done individually for each taxpayer.

Income Tax Slabs Under the Old Regime

For individuals below 60 years of age, the old regime slabs are as follows:

Senior citizens (60 to 80 years) get a higher basic exemption limit of ₹3 lakh, and super senior citizens (above 80 years) get ₹5 lakh, under the old regime.

Income Tax Slabs Under the New Regime

No tax is payable on income up to ₹12 lakh, except for income taxed at special rates, such as capital gains. For salaried taxpayers, this limit increases to ₹12.75 lakh due to the ₹75,000 standard deduction.

This slab structure applies the same way regardless of age. Unlike the old regime, the new regime does not give senior citizens a higher basic exemption limit.

New Tax Regime Exemptions

An exemption is a portion of your income that is excluded from the tax calculation altogether, such as an allowance. HRA exemption under Section 10(13A) is not available in the new regime. Interest paid on a home loan for a self-occupied property is also not allowed as a deduction from income under the new regime.

A limited set of allowances and exemptions do continue to apply in the new regime:

• Transport allowance for a person who is blind, deaf or dumb, or has an orthopaedic disability
• Conveyance allowance for expenses incurred while performing official duties
• Allowance for travel or transfer on official duty
• Daily allowance to meet ordinary daily expenses incurred by an employee on account of an absence from their normal place of duty
• Perquisites for official purposes

New Regime Deductions: What Is Allowed

A deduction reduces your taxable income based on an eligible expense or contribution, unlike an exemption which excludes income outright. The list of new tax regime deductions allowed is short compared to the old regime:

1. Standard deduction of ₹75,000 for salaried individuals and pensioners
2. Employer’s contribution to NPS under Section 80CCD(2), up to 14% of salary for both government and private sector employees
3. Deduction for family pension under Section 57(iia), up to ₹25,000
4. Contribution to the Agniveer Corpus Fund under Section 80CCH

Deductions available in the new tax regime do not include Section 80C, Section 80D, Section 80E, Section 80G, or most other deductions listed under Chapter VI-A. If a deduction is not on the short list above, it is generally unavailable under the new regime.

Standard Deduction in New Regime

The standard deduction in the new regime is ₹75,000 for salaried individuals and pensioners for FY 2025-26. This is higher than the ₹50,000 standard deduction available under the old regime. A standard deduction of ₹50,000, or the salary amount if lower, has been available in both regimes from AY 2024-25 onwards, and was later raised to ₹75,000 for the new regime.

This deduction is applied automatically against salary income. You do not need to submit any proof or make any investment to claim it, in either regime.

Is 80C Available in New Tax Regime?

No. Section 80C, which covers investments such as EPF, PPF, ELSS, life insurance premiums, and principal repayment on a home loan, is not available under the new tax regime. This deduction, along with Section 80D (health insurance premium), Section 80E (education loan interest) and most other Chapter VI-A deductions, applies only if you file under the old regime.

If you have made 80C investments during the year and want to claim them, you need to select the old regime while filing your return.

Deductions in Old Tax Regime

The old tax regime allows a wide range of deductions under Chapter VI-A of the Income Tax Act. The commonly used ones include:

• Section 80C: up to ₹1.5 lakh for EPF, PPF, ELSS, life insurance premium, and home loan principal repayment
• Section 80D: health insurance premium for self, family and parents
• Section 80E: interest paid on an education loan, with no upper limit
• Section 80TTA/80TTB: interest on savings accounts, up to ₹50,000 for senior citizens under 80TTB
• Section 24(b): interest on a home loan, up to ₹2 lakh for a self-occupied property
• HRA: exemption on rent paid, subject to salary structure and city of residence
• LTA: exemption on travel cost for leave travel, subject to conditions

Claiming these deductions requires supporting documents, such as proof of investment, rent receipts, and loan interest certificates, which need to be maintained and, in some cases, submitted to your employer or kept ready in case of a tax department query.

New Tax Regime Benefits

The main benefit of the new regime is a lower tax outgo for individuals who do not have large deductions to claim. Because of the ₹60,000 rebate under Section 87A and the ₹75,000 standard deduction, salaried individuals with an income up to ₹12.75 lakh pay no tax under the new regime.

Other benefits include:

• Fewer documents to maintain, since most deductions do not apply
• A simpler return-filing process for people without home loans, HRA claims or large investment-linked deductions
• Wider tax slabs at the higher end, which can reduce tax for incomes up to ₹24 lakh compared to the old regime’s flat 30% rate above ₹10 lakh

Checklist: What to Check Before You File

1. Calculate your tax under both regimes using your actual income and deductions for FY 2025-26, not last year’s figures, since the slabs and rebate changed.
2. List every deduction you can claim under the old regime (80C, 80D, HRA, home loan interest) and confirm you have proof for each.
3. Check the regime selected in your ITR form. The new regime applies by default unless you actively choose the old regime.
4. If you have business or professional income, note that switching back to the new regime after opting out is allowed only once in a lifetime, using Form 10-IEA.
5. Check the filing due date under Section 139(1) for FY 2025-26 (AY 2026-27), and ensure your regime choice is submitted on or before that date.
6. Confirm your regime intimation with your employer, as they will deduct TDS under the new regime by default if you do not inform them otherwise. You can still pick a different regime while filing your return.

Conclusion

The choice between the old and new tax regime comes down to how much you can claim under Chapter VI-A deductions and exemptions, such as HRA and home loan interest. If your eligible deductions are small, the new regime’s lower slab rates and higher rebate usually work out cheaper. If you have a home loan, pay rent, or invest heavily in 80C and 80D instruments, the old regime may still save you more. The only reliable way to know is to work out your tax under both regimes with your actual numbers before you file, check which regime your ITR form has selected by default, and confirm you have the proof ready for any deduction you plan to claim.