For a salaried person on a gross salary of ₹25 lakh, the old regime costs less only when deductions and exemptions add up to more than ₹8,00,000; below that, the new regime, the default for FY 2026-27, is cheaper. A metro renter paying ₹60,000 a month on a basic of about half the salary, with full 80C, 80D and NPS, just clears that line, while a home loan owner who pays no rent falls well short.

How much must you deduct for the old regime to win at ₹25 lakh?

For FY 2026-27, the new tax regime slabs charge nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% in ₹4 lakh steps, and 30% above ₹24 lakh. After the ₹75,000 standard deduction, a ₹25,00,000 salary is taxed on ₹24,25,000: ₹3,07,500, or ₹3,19,800 with 4% cess.

For the same year, the old regime, with a ₹50,000 standard deduction and 30% above ₹10 lakh, reaches that tax only when ₹8,00,000 of deductions bring taxable income down to ₹16,50,000. The section 80C guide works it out and shows the figure holding from ₹24,75,000 to ₹50 lakh.

This page compares the old vs new tax regime on gross salary, before the standard deduction and without the employer's PF. If ₹25 lakh is your CTC with PF on full wages, your gross salary is about ₹22.95 lakh, as CTC vs in hand salary shows, and the line is about ₹7.7 lakh, the figure in the financial planning guide. Old regime deductions here mean everything beyond the standard deduction; section numbers are from the 1961 Act, and 80C is section 123 of the Income-tax Act, 2025.

Does metro rent or a home loan clear ₹8 lakh?

Shalini earns ₹25,00,000 a year in Mumbai: basic ₹1,04,000 a month (₹12,48,000 a year) and HRA of ₹52,000 a month (₹6,24,000). She pays ₹60,000 a month in rent, ₹7,20,000 a year.

Her HRA exemption is the least of the HRA she receives (₹6,24,000), rent minus 10% of basic (₹7,20,000 minus ₹1,24,800, or ₹5,95,200) and 50% of basic, the metro rate (₹6,24,000): ₹5,95,200. Add the full ₹1,50,000 of 80C, ₹25,000 under 80D, ₹50,000 of her own NPS under 80CCD(1B) and ₹2,500 of professional tax, which her state levies: ₹8,22,700 in all.

Her old-regime taxable income is ₹25,00,000 minus ₹50,000 minus ₹8,22,700, or ₹16,27,300. Tax is ₹1,12,500 on the first ₹10 lakh plus 30% of ₹6,27,300: ₹3,00,690, or ₹3,12,720 with cess, rounded to the nearest ₹10. She is ₹22,700 past the line, so the old regime wins by ₹7,080.

A colleague on the same salary owns her flat and pays no rent. Her stack is ₹2,00,000 of home loan interest, the cap for a self-occupied home finished within five years of the loan year (₹30,000 otherwise), plus the same 80C, 80D, NPS and professional tax: ₹4,27,500.

Stack at ₹25 lakh Deductions Old regime tax New regime tax Cheaper
Rent (Shalini) ₹8,22,700 ₹3,12,720 ₹3,19,800 Old, by ₹7,080
Home loan ₹4,27,500 ₹4,36,020 ₹3,19,800 New, by ₹1,16,220
Rent and a home loan ₹10,22,700 ₹2,50,320 ₹3,19,800 Old, by ₹69,480
Neither ₹2,27,500 ₹4,98,420 ₹3,19,800 New, by ₹1,78,620

The third row is someone who rents in Mumbai and repays a loan on a flat in another city. Of these four stacks, only the two with ₹60,000 rent get past ₹8 lakh; without rent, the home loan stack is ₹3,72,500 short. 80D for parents adds at most ₹50,000, so closing the gap takes something larger, such as more than ₹3.7 lakh a year of education loan interest under 80E.

The rent row needs two things besides the rent: one of the eight cities that get 50% of basic (Mumbai, Delhi, Kolkata and Chennai, and from 1 April 2026 Bengaluru, Hyderabad, Pune and Ahmedabad), and a basic near half the salary. In a 40% city the same rent earns ₹4,99,200 and the new regime wins by ₹22,870. In Mumbai on a basic of ₹10,00,000, 40% of the salary, the exemption stops at ₹5,00,000 and the new regime wins by ₹22,620.

Does the same rent win at ₹18 lakh or ₹40 lakh?

Keep the ₹60,000 rent, basic at about half the salary (Shalini's ₹12,48,000 at ₹25 lakh), HRA at half of basic, and the same 80C, 80D, NPS and professional tax.

Gross salary Break-even HRA exemption Rent stack Cheaper
₹18 lakh ₹6,41,667 ₹4,50,000 ₹6,77,500 Old, by ₹11,180
₹25 lakh ₹8,00,000 ₹5,95,200 ₹8,22,700 Old, by ₹7,080
₹40 lakh ₹8,00,000 ₹5,20,000 ₹7,47,500 New, by ₹16,380

At ₹40 lakh, 10% of a ₹20 lakh basic takes ₹2,00,000 off the rent, so the same flat earns a smaller exemption while the line stays at ₹8 lakh. A raise can move a renter from the old regime to the new without any change at home.

What proof do HRA and home loan claims need?

HRA needs rent receipts, and your landlord's PAN once rent passes ₹1,00,000 a year. Rent above ₹50,000 a month, like Shalini's, also means deducting 2% TDS for the landlord (the rate since 1 October 2024), covered in TDS on rent above ₹50,000. Paying rent to a parent has its own test, worked in HRA on rent paid to parents.

A home loan claim needs the lender's interest certificate and your name on both the loan and the property. A couple who share both can each claim, which co-borrower vs co-owner explains.

When do you choose, and can you change it?

You tell your employer at the start of the year, but that only sets the tax deducted each month. With no business income, you choose again every year in a return filed by the due date. Miss the due date and the late return is taxed under the new regime, whatever you told your employer. Employers usually ask for proofs between December and February; if yours are late, see what happens when you miss the deadline.

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Frequently asked questions

Yes, when you pay rent for the home you live in and the home you own is somewhere else, for example in another city. A home you cannot live in because your job is elsewhere still counts as self-occupied, so its interest is deductible up to ₹2,00,000 a year (₹30,000 if construction was not finished within five years of the end of the year the loan was taken) under section 24(b) of the 1961 Act. Neither claim exists in the new regime.
No. The old regime deducts professional tax paid, up to ₹2,500 a year, under section 16(iii) of the 1961 Act, while the new regime allows only its ₹75,000 standard deduction against salary. It is a small amount, but it counts towards the old regime's break-even.
It can, when the margin is small. For FY 2026-27, your employer's NPS contribution is deductible under section 80CCD(2) of the 1961 Act up to 14% of basic plus DA in the new regime but, for private-sector employers, only 10% in the old. If an employer adds 14% of a ₹12,48,000 basic on top of a ₹25 lakh salary, the ₹49,920 above 10% is taxed only in the old regime, about ₹15,600 more, enough to turn a ₹7,080 old-regime saving into a new-regime saving of about ₹8,500.

This is general information for salaried individuals in India, not personalised financial advice.