It is important for taxpayers to determine where their income fits within the latest income tax slabs in order to determine how much tax they must pay for AY 26–27, since the FY26 income tax season has begun, and a number of income tax forms are now available for filing on the Income Tax Portal.
Under the new Income-tax Act, 2025, which went into effect on April 1, 2026, the new income tax regime is the default regime for individual taxpayers. However, the old regime could nevertheless make a better fit for taxpayers who wish to claim deductions under a number of popular sections, including Section 80C, Section 80CCD(1B), Section 80D, Section 24, and more.
Income tax slabs for individuals below 60 years old
Income Tax Slabs FY 2025-26 (AY 2026-27)
| Old Regime | Tax Rate |
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 – Rs 5,00,000 | 5% |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
New Tax Regime
| New Regime | Tax Rate |
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 – Rs 8,00,000 | 5% |
| Rs 8,00,001 – Rs 12,00,000 | 10% |
| Rs 12,00,001 – Rs 16,00,000 | 15% |
| Rs 16,00,001 – Rs 20,00,000 | 20% |
| Rs 20,00,001 – Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Income tax slabs for senior citizens between 60 and 80 years old
| Old Tax Regime | New Tax Regime | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to Rs 3,00,000 | Nil | Up to Rs 4,00,000 | Nil |
| Rs 3,00,001 – Rs 5,00,000** | 5% above Rs 3,00,000 | Rs 4,00,001 – Rs 8,00,000** | 5% above Rs 4,00,000 |
| Rs 5,00,001 – Rs 10,00,000 | Rs 10,000 + 20% above Rs 5,00,000 | Rs 8,00,001 – Rs 12,00,000 | Rs 20,000 + 10% above Rs 8,00,000 |
| Rs 10,00,000 | Rs 1,10,000 + 30% above Rs 10,00,000 | Rs 12,00,001 – Rs 16,00,000 | Rs 60,000 + 15% above Rs 12,00,000 |
| Rs 16,00,001 – Rs 20,00,000 | Rs 1,20,000 + 20% above Rs 16,00,000 | ||
| Rs 20,00,001 – Rs 24,00,000 | Rs 2,00,000 + 25% above Rs 20,00,000 | ||
| Above Rs 24,00,000 | Rs 3,00,000 + 30% above Rs 24,00,000 | ||
Income tax slabs for super senior citizens above 80 years old
| Old Tax Regime | New Tax Regime | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to Rs 5,00,000 | Nil | Up to Rs 3,00,000 | Nil |
| Rs 5,00,001 – Rs 10,00,000 | 20% above Rs 5,00,000 | Rs 3,00,001 – Rs 7,00,000** | 5% above Rs 3,00,000 |
| Rs 10,00,001- Rs 50,00,000 | Rs 1,00,000 + 30% above Rs 10,00,000 | Rs 7,00,001 – Rs 10,00,000 | Rs 20,000 + 10% above Rs 7,00,000 |
| Rs 10,00,001 – Rs 12,00,000 | Rs 50,000 + 15% above Rs 10,00,000 | ||
| Rs 12,00,001 – Rs 15,00,000 | Rs 80,000 + 20% above Rs 12,00,000 | ||
| Rs 15,00,001- Rs 50,00,000 | Rs 1,40,000 + 30% above Rs 15,00,000 | ||
| Rs 50,00,001- Rs 100,00,000 | Rs 1,40,000 + 30% above Rs 15,00,000 | ||
| Rs 100,00,001- Rs 200,00,000 | Rs 1,40,000 + 30% above Rs 15,00,000 | ||
| Above Rs 200,00,001 | Rs 1,40,000 + 30% above Rs 15,00,000 | ||
Source: Income Tax Department
How should taxpayers determine whether they fall into the “new regime wins” category or the “old regime wins” category?
For FY 2025-26 (AY 2026-27), the simplest way to classify taxpayers is based on the amount of deductions and exemptions they can claim under the old regime versus the benefit of the lower tax rates and higher rebate available under the new regime, says Ramachandran Krishnamoorthy, Associate Partner, Managed Services, BDO India.
Quick Thumb Rule
| Gross Salary | Likely Winner if Total Deductions Are… |
| Up to Rs 12.75 lakh | The new regime almost always wins |
| Rs 13–18 lakh | The old regime may win if deductions exceed Rs 3–5 lakh |
| Rs 18–25 lakh | The old regime may win if deductions exceed Rs 5–7 lakh |
| Above Rs 25 lakh | The old regime often wins only when deductions exceed Rs 7–8 lakh+ |
These are indicative break-even levels and vary depending on the mix of HRA, home-loan interest, NPS, and other deductions.
The new regime typically works better for taxpayers who don’t claim significant deductions, given its lower rates and higher rebate threshold. However, those with meaningful investments and deductions—such as HRA, housing loan interest, section 80C investments—may still benefit from the old regime. Ashish Mehta, Partner at Khaitan & Co says as a broad indicator, salaried individuals earning incomes up to around Rs 12.75 lakh may end up paying NIL tax under the new regime (in view of the standard deduction), but this can vary depending on their specific deductions.
What are the biggest mistakes taxpayers make while choosing a tax regime during ITR filing?
Here are the biggest mistakes, according to Ramachandran Krishnamoorthy:
1. Comparing Tax Before Claiming All Deductions
A common error is to compare:
- New regime tax on actual income, versus
- Old regime tax after claiming only 80C.
Taxpayers often forget:
- HRA exemption
- Home-loan interest
- 80D (medical insurance)
- NPS (80CCD(1B))
- LTA
- Donations (80G)
The old regime may look unattractive until all deductions are included.
2. Ignoring Employer NPS Contribution in the New Regime
Many salaried employees assume all NPS benefits disappear in the new regime.
Employer contributions to NPS can still provide a deduction under the new regime, which can materially reduce taxable income.
3. Using Payroll Declarations Instead of Actual Year-End Figures
Employees often compare regimes using the declarations submitted to HR at the beginning of the year.
At ITR filing, the actual position may be different:
- Higher home-loan interest
- Additional tax-saving investments
- Medical insurance purchased during the year
- HRA exemption changes
The comparison should be based on actual numbers, not projections.
4. Ignoring Capital Gains and Other Income
Many people compare only salary income.
However, the final tax liability may also include:
- Equity capital gains
- Mutual fund gains
- Interest income
- Rental income
- Business income
The optimal regime should be determined using total income, not just salary.
5. Forgetting House Property Benefits
This is particularly relevant for property owners.
Common omissions:
- Home-loan interest deduction on self-occupied property.
- Interest deduction against house-property income for let-out property.
- Impact of rental income and municipal taxes.
For taxpayers with real estate holdings, this can significantly affect the outcome.
6. Assuming the New Regime Always Wins Below Rs 12 Lakh
The rebate under the new regime has made many people believe that the choice is automatic.
But if taxable income under the old regime falls substantially because of deductions, the old regime can still be competitive.
A proper calculation is still necessary.
7. Not Considering Future Years
Some taxpayers choose a regime based only on the current year.
Examples:
- A home loan has just started, so interest deductions will be large for several years.
- A house under construction may become eligible for deductions after possession.
- Retirement contributions may increase.
The better regime can change over time.
8. Believing Tax-Saving Investments Should Be Made Solely to Justify the Old Regime
A classic mistake is:
“I need a Rs 1 lakh more deduction, so I’ll invest Rs 1 lakh to save tax.”
The tax saved is usually much less than the amount invested.
Investments should be made because they fit financial goals, not merely to make the old regime appear better.
9. Business Owners Forgetting the Regime Switching Rules
For individuals with business or professional income, switching between regimes is subject to specific restrictions.
Many taxpayers discover this only after filing.
If business income is involved, the decision requires additional care.
Which documents should taxpayers review before making their final choice?
According to Ashish Mehta, before deciding, taxpayers should review key documents such as Form 16, salary structure, housing loan statements, investment proofs, and insurance receipts. A parallel tax computation under both regimes, using complete and accurate data, is essential to arrive at the most tax-efficient outcome.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.
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