From FY24, the new tax regime under Section 115BAC is the default. Most salaried filers will land there unless they explicitly opt out — and many will leave money on the table by doing nothing. Here's the clear-eyed framework we use with clients to pick the right regime for FY25.
What actually differs
The new regime offers lower slab rates and a higher rebate (₹7 lakh under 87A) but disallows ~70 deductions: 80C, 80D, HRA, LTA, home-loan interest on self-occupied property, and most chapter VI-A claims. The old regime keeps all deductions but uses the older, higher slab rates.
Standard deduction of ₹75,000 (from FY25) is available in both regimes — that's a recent change that narrowed the gap meaningfully for pure-salary earners.
Quick rules of thumb
Salary up to ₹7.5 lakh — new regime wins, almost always. The 87A rebate makes tax effectively zero. Salary ₹7.5–15 lakh with full 80C + 80D + HRA — old regime usually wins by ₹15,000–₹40,000. Salary above ₹15 lakh with home loan interest on let-out property or NPS top-up — old regime wins comfortably.
Founders drawing a director's salary and also booking business expenses through their company are an edge case: optimise the corporate side first, then pick the personal regime that matches what's left.
Common filing mistakes
Filing under the new regime as the default and then claiming deductions in the same return — the system simply ignores them. Missing the AIS / Form 26AS / TIS reconciliation before clicking submit. Forgetting Schedule FA for foreign assets above ₹20,000 cumulatively. Each of these triggers a notice within 60–90 days.
About the author
Neha Bansal, CA
Senior Manager, Personal Tax at Regikart. Want to discuss this in the context of your business?
