Glossary · Income Tax
Old vs New Regime
Two alternative tax structures for individuals and HUFs — the old regime with most exemptions, and the new default regime with lower slab rates but limited deductions.
The new regime was introduced in FY 2020-21 and made the default from FY 2023-24. For FY 2025-26, the new regime slabs are ₹0-3L nil, ₹3-7L 5%, ₹7-10L 10%, ₹10-12L 15%, ₹12-15L 20%, above ₹15L 30%, with a rebate under Section 87A making income up to ₹12L effectively tax-free. The old regime retains 80C, 80D, HRA, LTA, and other deductions. Taxpayers can switch between regimes only at the time of filing the ITR, except for business income where the choice is once-for-life.
Examples
A doctor earning ₹18L a year saves more under the old regime because of heavy 80C and 80D investments; a young salaried employee with no deductions prefers the new regime for the lower slab rates.