Compare the old and new tax regimes on your salary, see which costs less, and find out exactly how much deduction the old regime needs to win.
Which regime should most people pick?
The new one, unless you have a large HRA exemption or a home loan. The breakeven above is usually somewhere between ₹4,00,000 and ₹8,00,000 of deductions, and most people who are not paying big rent or big loan interest never get near it.
What does the old regime let me deduct?
Section 80C up to ₹1,50,000, section 80D for health cover with a separate ceiling for your parents, 80CCD(1B) for another ₹50,000 of NPS, HRA under rule 2A, home loan interest up to ₹2,00,000 on a self-occupied house, and professional tax. The new regime keeps only the standard deduction and the employer NPS deduction under 80CCD(2).
Can I switch every year?
If you are salaried, yes. You can pick a different regime each year when you file, whatever your employer deducted during the year. If you have business or professional income you can leave the new regime only once, and going back is a one-time move.
Why is my employer using the new regime?
Because it is the default. Payroll deducts under the new regime unless you tell them otherwise at the start of the year. You can still claim the old regime when you file and take the difference as a refund, but that means waiting for your money.
Does the ₹12 lakh rebate make the new regime unbeatable?
Up to ₹12 lakh of taxable income, more or less, yes. The section 87A rebate clears the tax entirely there, and no amount of deduction can beat zero. Above that the two regimes start to converge and large deductions can tip it.
Should I invest just to save tax?
Only if the investment is worth holding on its own. Locking ₹1,50,000 into a product you dislike to save ₹46,800 of tax is a poor trade. Work out the breakeven first, then decide whether the deductions you already have get you there.