How to compare old and new salary tax regimes fairly
A useful tax comparison starts with comparable income inputs. The old and new regimes use different permitted deductions and salary standard deductions, so comparing headline rates alone can be misleading.
By INDwise · Published 29 October 2026 · Editorial policy
Illustration: ₹18 lakh gross salary and ₹1.5 lakh eligible old-regime deductions
Lower estimated annual tax: ₹1,50,800
| Annual gross salary | ₹18,00,000 |
|---|---|
| Eligible old-regime deductions | ₹1,50,000 |
| New-regime tax | ₹1,50,800 |
| Old-regime tax | ₹3,04,200 |
| New-regime taxable income | ₹17,25,000 |
| Old-regime taxable income | ₹16,00,000 |
| Potential annual saving | ₹1,53,400 |
Use gross salary, with employer costs handled separately
An employer’s CTC may include retirement contributions and non-cash benefits. The salary-tax comparison takes gross salary. Use the CTC tool first if you need help separating the employer-cost figure from the assumed annual cash gross.
Enter deductions you can actually claim
The old-regime deduction field represents eligible exemptions and deductions other than the standard deduction, which the model applies itself. Do not enter an attractive round number without checking eligibility and supporting records. Avoid counting an exemption twice.
Check both the calculation year and the income scope
This page uses the existing FY 2026–27 model for resident individuals below 60 with ordinary income up to ₹50 lakh. Special-rate income, surcharge and the other listed exclusions require broader assessment. The displayed lower liability is a comparison for entered assumptions, not a determination of filing eligibility.
Questions about this example.
Does choosing a regime with my employer complete every filing choice?
Do not assume payroll withholding settles all filing requirements. Confirm the applicable election and filing rules for your circumstances.
Can I compare tax if I have capital gains too?
This tool excludes special-rate income. Use a qualified adviser or appropriate official tools for the full return rather than adding those gains to ordinary salary here.
Assumptions and references
FY 2026–27 planning estimate for resident individuals below 60, ordinary income up to ₹50 lakh. Includes the ₹75,000 new / ₹50,000 old salary standard deduction, resident rebate, new-regime rebate marginal relief and 4% cess. Excludes capital gains, surcharge, foreign tax credits, agricultural income and special-rate income. Inputs are rounded to the nearest ₹10 for taxable income; final tax to the nearest ₹10. Check eligibility and current rules before filing.
Examples are computed from the same calculator functions as the interactive tools. Software checks do not constitute a personalised tax or investment review.