Old vs New Tax Regime Simulator India: Compare & Save Tax · 2026

Old vs New Tax Regime Simulator India 2026: This free INDwallet tool compares your income tax under the old regime (with deductions like 80C, 80D, HRA, home loan interest) against the new regime (lower slab rates but almost no deductions). For most salaried individuals with significant investments and expenses, the old regime often wins when total deductions exceed ₹3.5‑4 lakhs. Enter your salary and deductions to find out instantly.

AI Summary: Old vs New Tax Regime Simulator

• The new regime has lower headline tax rates but removes most deductions like 80C, 80D, HRA, and home loan benefits.
• The old regime allows full deductions, which can offset higher base rates, often beneficial for those with savings discipline.
• The break‑even point typically lies around ₹3.5‑4 lakh of deductions; beyond that, the old regime is usually better.
• Salaried individuals can choose between regimes each financial year. Business income earners have restrictions.
• Try the free Old vs New Tax Simulator and track your salary in the Income Wallet.

1. What is Old vs New Tax Regime India 2026?

The Indian government offers two income tax frameworks for individuals. The old regime provides higher basic exemption limits but taxes income at graduated slab rates (5%, 20%, 30%) after allowing various deductions (Section 80C, 80D, HRA, LTA, home loan interest, etc.). The new regime, introduced as a simpler alternative, offers lower slab rates and a larger standard deduction (₹50,000 for salaried) but removes almost all major deductions. Taxpayers must evaluate which one results in lower tax outgo based on their income profile and eligible deductions.

2. Tax Slabs: Old Regime vs New Regime (FY 2025‑26)

The new regime clearly offers lower rates, but the advantage disappears if you have significant deductions under the old regime. The simulator does the math for you.

3. Deductions You Lose in the New Tax Regime

• Section 80C: Up to ₹1,50,000 on PPF, EPF, ELSS, life insurance, tuition fees, etc.
• Section 80D: Health insurance premium (₹25,000 for self, ₹50,000 for senior citizens).
• HRA (House Rent Allowance): A significant exemption for salaried individuals living in rented homes.
• Home Loan Interest (Section 24): Up to ₹2,00,000 on interest paid for a self‑occupied property.
• LTA (Leave Travel Allowance): Exemption on domestic travel expenses.
• Standard Deduction of ₹50,000: This remains available under the new regime as well from FY 2023‑24 onwards.

If your total deductions exceed approximately ₹3.5‑4 lakhs, the old regime typically becomes more tax‑efficient.

4. Real India Example: How ₹15L Salary Is Taxed

Assume a salaried individual with ₹15,00,000 annual income. They claim ₹1.5L under 80C, ₹25k under 80D, ₹2L HRA, and ₹2L home loan interest.

This example clearly shows the power of deductions. Run your own numbers in the calculator above.

5. Common Mistakes When Choosing a Regime

• Defaulting to the new regime without calculation: Many employers default to the new regime. You must actively choose the old regime if it benefits you.
• Not claiming all eligible deductions: Ensure you include HRA, 80D, education loan interest, and NPS contributions under 80CCD(1B).
• Forgetting the standard deduction is available in both regimes: The ₹50,000 deduction is common to both.
• Choosing the old regime but not submitting proofs: You risk a higher tax deduction at source if your employer applies the new regime by default.
• Assuming the old regime is always better for high income: If you have very few deductions, the new regime might still be superior even at ₹20L+ income.

6. Step‑by‑Step: Using the Old vs New Tax Simulator

Step 1: Enter your annual gross income

Include all taxable components: basic salary, HRA, special allowances, bonuses, and other income. The simulator automatically deducts the ₹50,000 standard deduction.

Step 2: Fill in your deductions

Enter your 80C investments, 80D health insurance premium, HRA exemption amount, home loan interest (Section 24), NPS (80CCD(1B)), and any other deductions you are eligible for under the old regime.

Step 3: Instantly compare the tax liability

The tool calculates tax under both regimes using the latest slab rates and shows you the exact difference. It also highlights the winning regime.

Step 4: Download or save the comparison

Use the Income Wallet to store your salary and tax projections for the financial year.

7. Decision Framework: Which Regime Should You Pick?

• If your total deductions exceed ₹4 lakhs: Opt for the old regime — you will likely save significantly.
• If your total deductions are between ₹2.5L and ₹4L: Calculate. The precise break‑even depends on your income. Use the simulator.
• If you have minimal deductions (below ₹2L): The new regime is simpler and will probably result in lower tax.
• If you want administrative ease: The new regime requires no document submission. But the tax saving may be lower; weigh the convenience.
• If you are a business income earner: The choice is more restricted; consult a tax professional.

8. How INDwallet Tools Help Beyond the Simulator

• Old vs New Tax Simulator: The core tool. Use it every April to decide which regime to declare to your employer.
• Income Wallet: Log your salary components, track HRA, and project your post‑tax take‑home.
• Wealth Wallet: Monitor your net worth, including the impact of tax planning on your savings.
• Budget Master Simulator: Plan your expenses after knowing your exact tax liability.

9. Explore More Tax & Salary Tools

• Old vs New Tax Simulator – The main tool.
• Capital Gains Tax India 2026 – LTCG, STCG rules.
• Income Wallet – Track salary, tax, and deductions.
• Section 80C Deductions India 2026 – Full list of 15 options.
• PPF vs ELSS vs NPS India – Best 80C choice.