New Tax Regime 2026-27: Should You Switch?

# New Tax Regime FY 2026-27: Should You Switch? The new regime is now the default. If you have not explicitly opted for the old regime, you are already in the new regime. Here is what changed and how to decide. ## New Regime Slabs (FY 2026-27) | Income | Rate | |------------------|-------| | Up to ₹4L | Nil | | ₹4L – ₹8L | 5% | | ₹8L – ₹12L | 10% | | ₹12L – ₹16L | 15% | | ₹16L – ₹20L | 20% | | ₹20L – ₹24L | 25% | | Above ₹24L | 30% | Standard deduction: ₹75,000. Section 87A rebate applies up to ₹12.75L total income — meaning zero tax liability. ## What You Give Up in New Regime You cannot claim: 80C (₹1.5L), 80D (health insurance), HRA, LTA, home loan interest deduction (Section 24b). ## When Old Regime Still Wins Run the numbers. If your total deductions exceed approximately ₹4.5L for a ₹15L income, the old regime saves more tax. This is rare but possible for people with home loans, high insurance premiums, and maximum 80C utilisation. ## The 80C Question Many people invested in ELSS, PPF, or NPS primarily for the 80C benefit. Under the new regime, these instruments still make sense for wealth-building — but the tax incentive is gone. PPF is still EEE (exempt-exempt-exempt). NPS at maturity: 60% lump sum exempt, 40% annuity taxed. ## Recommendation For most salaried professionals earning below ₹20L with a standard deduction and basic investments: new regime saves tax. Above ₹20L with home loan EMI, HRA, and maxed deductions: model both.