New vs old tax regime
With the beginning of the new financial year 2026-27, a big question is once again facing the employed people. Choose old tax system or new? Like every year, this time too many taxpayers are confused about which option will save more for them.
Talking about the new tax regime, this system has become increasingly popular in the last few years. The biggest reason for this is low tax rates and simple structure. If your taxable income is up to Rs 12 lakh in FY 2026-27, then you will not have to pay any tax. Salaried people also get a standard deduction of Rs 75,000, due to which the tax can be zero on salary up to Rs 12.75 lakh.
Apart from this, some benefits like meal vouchers, car facility from the company, gifts up to Rs 15,000 and employer’s contribution to NPS are also available in it. Exemption is also available on gratuity, leave encashment and family pension up to the prescribed limit.
Old tax system: Beneficial for those with more exemptions
Although the new system is simpler, the old tax system still proves to be better for many people. In this, there is no tax on income up to Rs 5 lakh and a standard deduction of Rs 50,000 is available. The specialty of the old system is the many discounts available in it. Like HRA, exemption of up to Rs 2 lakh on home loan interest, investment up to Rs 1.5 lakh under Section 80C, health insurance premium, education loan interest and tax exemption on donation. Apart from this, now increased discount is also available on children’s education and hostel expenses.
What do experts say?
Tax expert Gopal Bohra says that before choosing any option, you must compare your tax liability in both the systems. The right choice depends on your income, investments and expenses.
How to make the right choice?
If you do not invest much or take advantage of tax exemption, then the new tax system will be better and easier for you. At the same time, if you take full advantage of HRA, home loan, insurance and other deductions, then the old system can save more. Overall, to take the right decision, it is very important to understand your financial situation and calculate both the options.
