1. Old vs New Tax Regime

The Indian government introduced a new tax regime with lower rates but fewer deductions in 2020. Taxpayers can choose between the old regime (with deductions but higher rates) or new regime (lower rates but minimal deductions).

2. How the Calculator Works

The calculator compares tax liability under both regimes:

Old Regime: Allows deductions (Section 80C, 80D, HRA, etc.) but has higher tax rates.

New Regime: Offers lower tax rates but eliminates most deductions (except standard deduction for salaried).

3. Key Differences

• Deductions: Old regime allows ₹1.5L+ under Section 80C, HRA, etc. New regime allows only ₹50,000 standard deduction for salaried.
• Tax Rates: New regime has lower rates but starts taxing at ₹3L vs ₹2.5L (for below 60) in old regime.
• Rebate: ₹12,500 (old) vs ₹25,000 (new) under Section 87A for income up to ₹5L/₹7L respectively.

4. When to Choose Which Regime

Choose Old Regime if: You have significant deductions (home loan, insurance, HRA, etc.) exceeding ₹3-4L annually.

Choose New Regime if: You have minimal deductions or your income is primarily from salary with limited investment options.

5. Frequently Asked Questions

Q1: Can I switch regimes every year?
A: Yes, you can choose a different regime each financial year.

Q2: Are senior citizen benefits available in new regime?
A: Yes, higher exemption limits apply in both regimes for senior/very senior citizens.

Q3: Which regime is better for salaried employees?
A: Depends on your deductions. Those with HRA, home loan may benefit from old regime.

Q4: Can businesses use the new regime?
A: No, the new regime is only for individuals and HUFs.

Q5: Is the standard deduction available in both regimes?
A: Only in new regime (₹50,000) and old regime for salaried (₹50,000).