Compare Old vs New Tax Regime for FY 2026-27 (AY 2027-28). Enter your income and deductions to see which regime saves you more money.
Income Sources
₹10.00 Lac
Taxed flat @ 30%. No slab benefit.
House Property
Deductions
Valid for both Old & New regimes.
Old Regime Only
Recommended: New Regime
You save ₹1,06,600
New Regime saves ₹1,06,600 due to lower slab rates and Section 87A rebate up to ₹12L.
Old Regime
New Regime
WinnerTax Slab Breakdown
Old Regime
New Regime
Statutory Disclaimer: This calculator is an educational estimation tool based on the Income Tax Act, 1961, Section 115BAC, and recent Finance Acts. Tax liability may vary depending on unique deductions, minor head classifications, or residential status. Consult a qualified Chartered Accountant (CA) for personalized filing.
Formulas, statutory slab logic, and edge-case exceptions authored and reviewed by Ganamurthy N N (M.S. Software Engineering, BITS Pilani | CFP® Certification Candidate — 3/4 Modules Cleared) • View Editorial Methodology →
Net Tax Calculation & Marginal Relief Formula
Under the default New Tax Regime, total tax liability is computed across reformed progressive brackets after deducting the statutory ₹75,000 standard deduction. Incomes up to ₹12,00,000 benefit from the Section 87A rebate, resulting in zero base tax.
Taxable Income = Gross Total Income - Standard Deduction (₹75,000 New / ₹50,000 Old) - Deductions
Basic Slab Tax = ∑ (Income in Bracket_i × Tax Rate_i)
If Taxable Income ≤ ₹12,00,000 (New Regime):
Rebate u/s 87A = Basic Slab Tax => Base Tax = ₹0
If ₹12,00,000 < Taxable Income ≤ ₹12,50,000 (Marginal Relief Range):
Tax Payable ≤ (Taxable Income - ₹12,00,000)
Total Tax Payable = (Capped Tax + Surcharge) × 1.04 (4% Health & Education Cess)Annual CTC minus employer PF, gratuity, and non-taxable allowances.
Flat ₹75,000 under New Tax Regime; flat ₹50,000 under Old Tax Regime.
Full rebate up to ₹12L taxable income in New Regime; up to ₹5L in Old Regime.
Mandatory 4% surcharge levied on the aggregate of income tax and surcharge.
Marginal Relief Worked Example: ₹12.95 Lakh Gross CTC
Scenario: A salaried employee receives a gross CTC of ₹12,95,000 with no business income under the New Tax Regime for FY 2026-27.
Marginal relief saves ₹66,560! Effective tax rate is just 1.60% of CTC.
Tax Slab Comparison: New Tax Regime vs. Old Tax Regime
Official statutory tax brackets for Individual Taxpayers for FY 2026-27 (AY 2027-28)
| Income Bracket | New Regime Rate (Default) | Old Regime Rate | Applicable Deductions |
|---|---|---|---|
| Up to ₹2,50,000 | 0% (Exempt) | 0% (Exempt) | Standard deduction applies in both |
| ₹2,50,001 – ₹3,00,000 | 0% (Exempt) | 5% | Old allows 80C, 80D, HRA |
| ₹3,00,001 – ₹5,00,000 | 5% (Rebate u/s 87A up to ₹12L) | 5% (Rebate u/s 87A up to ₹5L) | New regime allows Employer NPS 80CCD(2) |
| ₹5,00,001 – ₹7,00,000 | 5% (Full rebate) | 20% | Old allows Sec 24b Home Loan Interest |
| ₹7,00,001 – ₹10,00,000 | 10% (Full rebate) | 20% | New gives ₹75,000 Standard Deduction |
| ₹10,00,001 – ₹12,00,000 | 15% (Full rebate up to ₹12L) | 30% | Old gives ₹50,000 Standard Deduction |
| ₹12,00,001 – ₹15,00,000 | 20% (Marginal relief applies) | 30% | Surcharge capped at 25% in New |
| Above ₹15,00,000 | 30% | 30% | Highest marginal rate identical at 30% |
* Under the New Regime, individuals with taxable income up to ₹12,00,000 pay zero base tax due to Section 87A rebate.
What Most Taxpayers & Investors Miss
Employer NPS (80CCD(2)) is the Golden Tax Shield in New Regime
While Section 80C deductions are eliminated under the New Regime, employer contributions to NPS under Section 80CCD(2) remain 100% tax-free up to 14% of Basic + DA for private and public sector employees.
Watch the Combined ₹7.5 Lakh Employer Contribution Cap
Under Section 17(2)(vii), aggregate annual employer contributions exceeding ₹7.5 Lakh across EPF, NPS, and Superannuation are taxed as perquisites in the employee hands, along with annual interest/dividend accruals.
Salaried Employees Can Switch Regimes Annually at ITR
Salaried individuals with no business or professional earnings can toggle between Old and New regimes every single year when filing their ITR. Freelancers and consultants with 44ADA income can switch only once.
Frequently Asked Questions & Edge Cases
How does Marginal Relief work if my taxable income is slightly above ₹12 Lakh (e.g., ₹12.20 Lakh) under the New Tax Regime?
Under the New Tax Regime for FY 2026-27, taxable income up to ₹12,00,000 has zero tax liability due to the Section 87A rebate. If your taxable income reaches ₹12,20,000 (after standard deduction), you exceed the limit by ₹20,000. Without relief, regular slab math would assess ₹84,000 in tax. However, Section 87A Marginal Relief explicitly mandates that the total tax payable cannot exceed the amount by which your taxable income exceeds ₹12,00,000. Hence, your base tax is capped at exactly ₹20,000. Adding the 4% Health & Education Cess (₹800), your total tax is ₹20,800. You save ₹66,560 through marginal relief.
Can I claim Employer NPS contribution under Section 80CCD(2) in the New Tax Regime?
Yes! Section 80CCD(2) is one of the very few Chapter VI-A deductions retained in the New Tax Regime under Section 115BAC. Private-sector employees can claim a deduction of up to 14% of their Basic Salary + Dearness Allowance (DA) contributed by their employer to the National Pension System (NPS). Government employees also receive a 14% limit. This deduction is allowed over and above the ₹75,000 standard deduction.
Is Employer EPF contribution included in the ₹1.5 Lakh Section 80C limit?
No. Only the employee's own 12% EPF contribution qualifies for the ₹1,50,000 deduction under Section 80C (available only in the Old Regime). The employer's matching 12% contribution is exempt under Section 10, provided total employer contributions across EPF, NPS, and Superannuation do not exceed ₹7,50,000 per financial year under Section 17(2)(vii).
Can I switch between the Old and New Tax Regime every year?
It depends on your income profile: 1. Salaried Individuals (No Business Income): You have complete flexibility to evaluate Old vs New regimes every year when filing ITR-1 or ITR-2. 2. Professionals & Business Owners (ITR-3 or ITR-4): If you have income from business or profession (including Section 44ADA freelance income), you can opt out of the default New Regime to the Old Regime only ONCE in your lifetime via Form 10-IEA. If you later return to the New Regime, you can never switch back to the Old Regime as long as your business income continues.
Why is my monthly in-hand salary lower than CTC ÷ 12?
CTC (Cost to Company) includes several employer-side liabilities and deferred retirement benefits that never reach your monthly bank account: 1. Employer EPF (12% of Basic) and EPS pension contributions. 2. Gratuity provision (~4.81% of Basic), which is only payable after completing 5 continuous years of service. 3. Annual performance bonus or variable components paid at year-end. 4. Mandatory payroll deductions: Employee EPF (12%), Professional Tax (~₹200/month), and monthly TDS (Tax Deducted at Source).
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