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.