The old tax regime is the set of slabs and deductions that section 202 does not use. You opt into it. If you do not, the new regime applies. The point of opting is the deductions: HRA, section 123, the extra NPS amount, and home-loan interest on a house you live in.
For a resident under 60 the nil band is ₹2,50,000. The next band, up to ₹5,00,000, is 5%. Then 20% up to ₹10 lakh, and 30% above that. A senior citizen and a super senior have a higher nil band. The new regime’s ₹4,00,000 band does not copy those age steps.
The standard deduction here is ₹50,000, not ₹75,000. Section 123, read with Schedule XV, allows up to ₹1,50,000. That was section 80C. It is one basket: PPF, employee PF, ELSS, life insurance within the premium rule, and the principal of a housing loan share the same cap. An extra ₹50,000 for your own NPS is section 124(3), outside that basket. Employer NPS for a private employer is 10% of salary, unless the employer is the government, in which case it is 14%.
HRA follows Schedule III. Home-loan interest on a self-occupied house is section 22(1)(b), capped at ₹2,00,000. The rebate under section 156(1) stops at total income of ₹5,00,000, and there is no marginal relief.
A worked example
Salary of ₹15,00,000, standard deduction ₹50,000, and a section 123 claim of ₹1,50,000. Taxable income is ₹13,00,000. The bill, cess included, is ₹2,10,600. Cess alone is ₹8,100.
The new regime on the same salary, with no section 123 claim allowed, is ₹97,500. The gap is the price of having only the ₹1,50,000 basket and nothing else. A large HRA exemption can close that gap. Put the rent and the basic pay into the regime calculator rather than guessing from a headline.
The section 123 guide lists what fits in the basket. The HRA guide is the other big old-regime number.
Mistakes people make
- Opting for the old regime and then forgetting to claim the deductions that justified it.
- Stacking PPF, ELSS and PF past ₹1,50,000 as if each had its own cap.
- Using the new regime’s ₹75,000 standard deduction on an old-regime return.
- Expecting a soft landing just above ₹5,00,000. The calculator’s one-rupee example goes from ₹0 to ₹13,000.
- Claiming the old deductions and also assuming section 202 will allow them. It will not.
The section
The slabs for a person who is not under section 202 sit in the First Schedule rates the Finance Act keeps in force. The deductions are section 123 (this was section 80C), section 19 for the standard deduction (this was section 16(ia)), and Schedule III for HRA (this was section 10(13A)). The choice against section 202 is the opt-out the regime guide explains.
Questions
Who should stay in the old regime?
Someone whose HRA, section 123 and home-loan interest cut the bill by more than the gap in slab rates. On salary of ₹15,00,000 with only the ₹1,50,000 cap used, the old-regime bill is ₹2,10,600 and the new-regime bill is ₹97,500. That one deduction is not enough.
Does the old regime have marginal relief at ₹5 lakh?
No. Total income of ₹5,00,000 from salary of ₹5,50,000 pays ₹0. One rupee more of salary, ₹5,50,001, pays ₹13,000. The rebate ends on the line.
Is the 37% surcharge only in the old regime?
Yes. The old regime adds 37% above ₹5 crore of income. The new regime stops at 25% above ₹2 crore. On sections 196, 197 and 198 the surcharge on that special-rate tax stops at 15% in either regime.
Sources
Figures checked 28 Oct 2026.