Old Tax Regime

The old tax regime is the long-standing income tax structure in India that combines higher slab rates with a wide range of deductions and exemptions. Before the introduction of Section 115BAC in Budget 2020 (effective FY 2020-21), this was the only regime available to individual taxpayers. From AY 2024-25 (FY 2023-24) onwards the new tax regime is the default, and a salaried taxpayer wishing to continue with the old regime must explicitly opt in. Despite no longer being the default, the old regime still produces a lower tax liability for many salaried Indians, particularly those with high rent in metro cities, home loans, and structured tax-saving investments. See the TDS on salary in India guide for the monthly deduction mechanics.

Slab Rates FY 2025-26 (AY 2026-27)

The old regime slabs are unchanged for FY 2025-26:

Income Slab (₹)	Tax Rate
0-2,50,000	Nil
2,50,001-5,00,000	5%
5,00,001-10,00,000	20%
Above 10,00,000	30%

In addition:

• Health and Education Cess: 4% on the income tax + surcharge
• Surcharge: 10% (income above ₹50 lakh), 15% (above ₹1 crore), 25% (above ₹2 crore), 37% (above ₹5 crore, capped at 25% from FY 2023-24 if non-business income)
• Section 87A rebate: Full rebate if total income is up to ₹5,00,000 (effectively no tax)

For senior citizens (60-79 years) the basic exemption is ₹3,00,000; for super-senior citizens (80+) it is ₹5,00,000. These higher slabs are not available under the new regime.

Available Deductions and Exemptions

The old regime is attractive precisely because it allows the following, most of which are disallowed under the new regime:

Section	Deduction / Exemption	Limit
10(13A) + Rule 2A	HRA exemption	Least of three formula
10(5) + Rule 2B	Leave Travel Allowance (LTA)	Twice in 4-year block
16(ia)	Standard Deduction	₹50,000
16(iii)	Professional Tax	Up to ₹2,500
24(b)	Home loan interest (self-occupied)	₹2,00,000
24(b)	Home loan interest (let-out)	No limit, but loss capped at ₹2L
80C / 80CCC / 80CCD(1)	EPF, PPF, ELSS, insurance, tuition, NSC, etc.	Combined ₹1,50,000
80CCD(1B)	Additional NPS Tier I	₹50,000
80CCD(2)	Employer NPS contribution	10% of basic + DA
80D	Health insurance premium	₹25,000 / ₹50,000 + parents bucket
80E	Education loan interest	No limit, 8 years
80EE / 80EEA	Additional home loan interest	₹50,000 / ₹1,50,000
80G	Donations	50% / 100%, varies
80GG	Rent paid (if no HRA)	Lower formula
80TTA / 80TTB	Savings bank / senior FD interest	₹10,000 / ₹50,000
80U / 80DD	Disability deductions	₹75,000 / ₹1,25,000

When fully utilised, an old-regime taxpayer can shield ₹4-6 lakh of gross salary from tax through HRA + Standard Deduction + 80C + 80D + 80CCD(1B) + home-loan interest alone.

When the Old Regime Wins

The old regime usually produces a lower tax bill for employees who tick most of the following:

• Live in rented accommodation in a metro city (Mumbai, Delhi, Kolkata, Chennai) and receive significant HRA
• Pay home loan EMI (interest deductible up to ₹2 lakh + principal under 80C)
• Fully use Section 80C through EPF, PPF, ELSS or insurance
• Pay health insurance premiums for self and senior parents
• Contribute ₹50,000 to NPS Tier I for the additional 80CCD(1B) deduction
• Have working spouse / dependents whose insurance also qualifies

For employees without these deductions, typically junior, single, no home loan, no significant 80C, the new regime’s lower slab rates usually win.

Worked Example, ₹15 Lakh Gross Salary

Consider an employee with ₹15,00,000 gross annual salary, paying ₹50,000 monthly rent in Mumbai with basic salary ₹6,00,000, ₹2,40,000 HRA, full 80C utilised, ₹25,000 health insurance.

Old Regime computation:

Component	Amount (₹)
Gross salary	15,00,000
Less: HRA exemption (least of three)	2,40,000
Less: Standard Deduction	50,000
Less: Professional Tax	2,500
Less: Section 80C	1,50,000
Less: Section 80D	25,000
Less: 80CCD(1B) NPS	50,000
Taxable Income	9,82,500
Tax (Old Regime slabs)	1,09,000
Cess @ 4%	4,360
Total tax	1,13,360

New Regime computation (same gross):

Component	Amount (₹)
Gross salary	15,00,000
Less: Standard Deduction (new)	75,000
Taxable Income	14,25,000
Tax (New Regime slabs)	1,40,000
Cess @ 4%	5,600
Total tax	1,45,600

In this case the old regime saves about ₹32,000 per year. The breakeven point shifts as rent, 80C usage and salary level change.

How to Opt In

For FY 2025-26 (AY 2026-27), the new regime is the default. To use the old regime:

• Salaried (no business income): Indicate the choice to your employer at the start of the year (Form 12BB) so monthly TDS uses old-regime computation. You can confirm or change the choice when filing your ITR by selecting old regime in the ITR form itself, no separate Form 10-IEA needed.
• Business / professional income: File Form 10-IEA before the due date of ITR (typically 31 July) to opt for the old regime. This form is mandatory for non-salaried taxpayers.

Switching Between Regimes

• Salaried (no business income): Can switch every year. Choose new in FY25-26, switch back to old in FY26-27, both are allowed.
• Business or professional income: Can switch back to old regime only once in a lifetime. Once you move to new and then opt out, you cannot return to old until business income ceases.

How Omnivoo Helps

Omnivoo runs both old- and new-regime simulations for every employee at the start of the year and surfaces the lower-tax choice with a one-click confirmation. The platform then applies the chosen regime to monthly TDS, recomputes whenever investment declarations change, and produces a Form 16 that matches the regime selected, so neither the employee nor the finance team has to track regime mechanics manually.