Old vs New Tax Regime — Helping Employees Actually Decide
Every salaried employee in India now has to actively choose between two tax regimes, and most make that choice once, on a form, without ever seeing the actual numbers side by side.
Under the new regime, income up to ₹12 lakh is effectively tax-free — thanks to a ₹60,000 rebate under Section 202 of the Income Tax Act, 2025. For salaried employees, the ₹75,000 standard deduction extends that threshold to ₹12.75 lakh gross.
The new regime, in numbers
| Slab | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,000–₹8,00,000 | 5% |
| ₹8,00,000–₹12,00,000 | 10% |
| ₹12,00,000–₹16,00,000 | 15% |
| ₹16,00,000–₹20,00,000 | 20% |
| ₹20,00,000–₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Plus a ₹75,000 standard deduction, and minimal other deductions — the main survivor is employer NPS contribution under Section 80CCD(2).
The old regime, in numbers
| Slab | Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,000–₹5,00,000 | 5% |
| ₹5,00,000–₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Plus a ₹50,000 standard deduction, and the full menu of deductions: 80C (up to ₹1.5 lakh), HRA exemption, 80D health insurance, home loan interest under 24(b), and more.
So which one actually wins?
New regime tends to win when:
Little to no HRA, home loan, or 80C investment to claim — common for younger employees or anyone without structured investments yet. Also simpler: no proofs to collect.
Old regime tends to win when:
Significant rent with HRA, a home loan, and maxed-out 80C — combined deductions can outweigh the new regime's lower slabs, particularly in the ₹10–20 lakh range.
The catch: the crossover point isn't a fixed number — it shifts with every employee's actual HRA, rent, investments and home loan interest.
What HR teams can actually do
- Show employees both numbers side by side, from their actual salary structure.
- Do this before the investment declaration window opens, not after.
- Remember: salaried employees can switch every year; only business-income filers are limited to switching once.
EZER shows this comparison to every employee, automatically
Old vs new, calculated from their real declaration — before they commit, not after.
Request a DemoThis is general information about Indian payroll and statutory rules, not legal or tax advice. Rules are still being notified state by state — check your own position with your consultant before you act on it.
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