Gross income is reduced by the standard deduction (for salaried and pensioners) and, in the old regime, by your Chapter VI-A deductions such as 80C and 80D. Tax is then applied slab by slab, not on the whole amount at the top rate.

Section 87A rebate is applied next — up to ₹60,000 in the new regime for taxable income up to ₹12 lakh, and ₹12,500 in the old regime up to ₹5 lakh. Surcharge applies to high incomes, and a 4% health & education cess is added at the end.

Both regimes are always computed so you can see which one costs you less.

Given: Salaried, gross income ₹15,00,000, deductions ₹2,00,000

New regime: taxable = 15,00,000 − 75,000 = ₹14,25,000

Tax = 0 + 4L×5% + 4L×10% + 2.25L×15% = 20,000 + 40,000 + 33,750 = ₹93,750

Plus 4% cess → ₹97,500

Old regime: taxable = 15,00,000 − 50,000 − 2,00,000 = ₹12,50,000

Tax = 12,500 + 1,00,000 + 75,000 = ₹1,87,500 → with cess ₹1,95,000

The new regime is cheaper here by about ₹97,500.

• Slabs shown are for FY 2025-26 (AY 2026-27) for individuals below 60; senior citizen old-regime slabs differ.
• Marginal relief on rebate and surcharge is not applied — figures near threshold boundaries may differ slightly.
• The new regime allows very few deductions; most Chapter VI-A benefits apply only in the old regime.
• Capital gains taxed at special rates, agricultural income and relief under Sections 89/90/91 are not covered.
• This is an estimate for planning — confirm with a qualified tax professional before filing.

Which regime should I choose?
The new regime usually wins unless you have substantial deductions — the comparison above shows your case.

Can I switch regimes?
Salaried taxpayers can generally choose each year; those with business income face restrictions.

What is the 87A rebate?
A full rebate that makes tax nil for taxable income up to ₹12 lakh in the new regime (₹5 lakh in the old).