Glossary · Income Tax
Old vs New Tax Regime
Two alternative income-tax rate structures available to individuals & HUFs from FY 2020–21 — the old regime with full deductions/exemptions, and the new regime with lower slab rates and limited deductions.
Section 115BAC (introduced by Finance Act 2020, made default from FY 2024-25) offers individual/HUF taxpayers a "new tax regime" with five low slabs — nil up to ₹3L, 5% ₹3–7L, 10% ₹7–10L, 15% ₹10–12L, 20% ₹12–15L, 30% above ₹15L — but forfeits most exemptions/deductions (80C, 80D, HRA, LTA, home-loan interest, etc.). The "old regime" retains the full Chapter VI-A deduction suite, 80C/80D/80E/80CCD1B, HRA exemption under section 10(13A), and the home-loan interest deduction under 24(b), with four slabs (5/20/30% plus cess). Salaried employees can switch every year; business income-taxpayers must pick at filing. A side-by-side comparison tool picks the cheaper option per income profile.
Examples
A salaried employee with ₹80,000 in 80C investments and ₹2.4L HRA exemption pays lower tax under the old regime; an employee with neither deductions nor HRA pays less under the new regime.