Key change for AY 2025-26: Standard deduction on salary is now ₹75,000 (up from ₹50,000) under the new regime. And the rebate u/s 87A covers income up to ₹7 lakh under new regime vs ₹5 lakh under old. These changes make new regime more attractive for most salaried employees.
New Regime Slabs (AY 2025-26)
| Income Range | Tax Rate |
|---|---|
| Up to ₹3 lakh | 0% |
| ₹3L – ₹6L | 5% |
| ₹6L – ₹9L | 10% |
| ₹9L – ₹12L | 15% |
| ₹12L – ₹15L | 20% |
| Above ₹15L | 30% |
Deductions Available in New Regime
The new regime eliminates most deductions. Only these are allowed:
✓Standard deduction on salary: ₹75,000
✓Employer NPS contribution u/s 80CCD(2): No limit
✓Section 80CCH: Agnipath scheme
✓Gratuity exemption under Section 10(10)
✗HRA exemption is NOT available
✗No 80C, 80D, 80G, 80TTA deductions
When Old Regime Wins
Old regime is better when your client has significant 80C investments, home loan interest, HRA, and health insurance premiums. If total deductions exceed ₹3.75 lakh, old regime generally saves more tax.
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