Old regime vs. new regime — how to actually decide

Nothing changed this year, but the maths did last year — and most people haven't re-checked it. For FY 2025-26 (the return due 31 July 2026), the new regime's tax-free threshold jumped to ₹12,00,000, thanks to a bigger rebate under Section 87A. Add the ₹75,000 standard deduction, and a salaried person can earn up to roughly ₹12,75,000 and pay zero tax under the new regime.

The old regime hasn't moved: its tax-free limit is still ₹5,00,000, its standard deduction is ₹50,000, and it still lets you claim deductions like Section 80C (₹1,50,000 cap), 80D (health insurance), HRA, and home loan interest — none of which the new regime allows. The new regime is the default; you have to actively choose the old one when filing.

Who this affects: salaried individuals filing their FY 2025-26 return by 31 July 2026. It matters most if you have real deductions to claim — an active home loan, HRA, or serious 80C/80D investments — because that's the only scenario where the old regime can still win.

What to do: add up your actual deductions — 80C investments, 80D premiums, HRA, home loan interest, and anything else you'd genuinely claim. As a rough rule, if that total is under roughly ₹3,75,000–₹4,25,000, the new regime almost certainly saves you more. If it's well above that, run both numbers before filing — don't assume either regime wins by default.

If you have salary income only, you choose your regime directly on the ITR form each year. If you have business or professional income and want the old regime, you need to file Form 10-IEA before your return's due date — miss that, and you're locked into the new regime for the year.