Salaried Person: How to Save Tax in FY 2026-27 | Old vs New Regime Calculator
A higher deduction does not automatically make the old regime better, and lower slab rates do not automatically make the new regime better. The correct choice depends on your salary structure, eligible exemptions, investments, housing loan and other permitted deductions. This guide helps a salaried person compare both regimes, plan investments and avoid last-minute mistakes.
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Download our ready-to-use Excel calculator and compare the Old and New Tax Regimes privately on your computer. Enter your salary, eligible exemptions and deductions—the workbook automatically calculates taxable income, rebate, marginal relief, 4% cess and estimated tax saving.
File: BDPS Income Tax Calculator FY 2026-27.xlsx • Educational estimate • Completely free for BDPS blog visitors
Quick Answer: Which Regime May Be Better?
New Regime may suit you when
- Your exemptions and deductions are low.
- Your salary income before standard deduction is up to ₹12.75 lakh and you qualify for the resident-individual rebate.
- You prefer simpler tax planning and better monthly cash flow.
- You do not pay substantial rent or home-loan interest.
Old Regime may suit you when
- You have a sizeable eligible HRA exemption.
- You fully use permitted investments/deductions such as EPF, PPF, ELSS, life insurance and eligible NPS.
- You pay eligible health-insurance premium.
- You have eligible home-loan interest and other deductions.
Income-tax Slabs for FY / Tax Year 2026-27
New Tax Regime
| Taxable income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
A resident individual may receive rebate up to ₹60,000 where eligible normal taxable income does not exceed ₹12 lakh. A salaried taxpayer can also receive standard deduction up to ₹75,000; therefore, salary before standard deduction of up to ₹12.75 lakh may result in nil tax where the prescribed conditions are satisfied. Marginal relief may apply when eligible income is slightly above ₹12 lakh.
Old Tax Regime
| Taxable income (individual below 60) | Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Under the old regime, the basic exemption is ₹3 lakh for a resident senior citizen aged 60–79 and ₹5 lakh for a resident super senior citizen aged 80 or more. Eligible resident individuals can receive rebate up to ₹12,500 when total income does not exceed ₹5 lakh. Standard deduction for salary is up to ₹50,000.
FY 2026-27 Old vs New Regime Calculator
Enter annual figures. Amounts should be in Indian rupees.
Old Regime
New Regime
Simplified estimate for a resident salaried person with ordinary slab-rate income up to ₹50 lakh. It excludes surcharge, special-rate income, relief for arrears, agricultural-income integration, AMT and other case-specific adjustments. New-regime rebate/marginal relief is applied only to the ordinary income used here.
Detailed Tax-Saving Plan for a Salaried Person
1. Start with your estimated annual salary
Collect your salary structure, expected bonus, Form 16 details, bank interest and house-property information. Do not compare regimes using only monthly take-home salary.
2. Calculate genuine old-regime exemptions
Estimate HRA exemption from actual salary, rent paid and city category. Include LTA only where the conditions and travel evidence are satisfied. Do not enter the full allowance appearing in the salary slip automatically.
3. Review eligible deductions
Subject to applicable conditions and limits, commonly reviewed items include employee EPF, PPF, ELSS, eligible life-insurance premium, tuition fees, principal repayment of eligible housing loan, NPS contribution, medical-insurance premium, qualifying donations, education-loan interest and eligible home-loan interest.
4. Do not invest only to obtain a deduction
First check whether the product suits your risk, liquidity and financial goals. A ₹1 investment does not save ₹1 of tax; it only reduces taxable income where the deduction is legally available.
5. Compare both regimes before submitting your declaration
The new regime is the default regime. Salaried persons without business income can generally make the appropriate choice while filing the return, subject to the law and return requirements applicable to their case. Employees should still give a timely declaration to the employer for correct TDS.
6. Preserve evidence
Keep rent receipts and agreement, landlord PAN where required, investment proofs, insurance receipts, donation certificates, loan certificates and NPS statements. A deduction without proper eligibility or evidence may be disallowed.
Practical Example: Annual Salary of ₹15 Lakh
Assume a salaried resident individual below 60 has gross salary of ₹15,00,000. Under the old regime, the employee has eligible HRA exemption of ₹1,80,000 and eligible deductions/home-loan benefits totalling ₹4,25,000.
| Particulars | Old Regime | New Regime |
|---|---|---|
| Gross salary | ₹15,00,000 | ₹15,00,000 |
| Standard deduction | ₹50,000 | ₹75,000 |
| Other eligible exemption/deductions used in example | ₹6,05,000 | Nil |
| Taxable income | ₹8,45,000 | ₹14,25,000 |
| Approximate tax including 4% cess | ₹84,760 | ₹97,500 |
| Illustrative result | Lower by ₹12,740 | — |
Common Mistakes to Avoid
- Counting investments that are not eligible or exceeding statutory limits.
- Claiming HRA without applying the prescribed exemption calculation.
- Ignoring bank interest, bonus, previous-employer salary or rental income.
- Assuming a nil-TDS salary automatically means no return or tax obligation.
- Waiting until March and purchasing unsuitable products only for tax saving.
- Using the rebate against special-rate income without checking legal restrictions.
Suggested Month-by-Month Planning
| Period | Action |
|---|---|
| April–June 2026 | Estimate total income, compare regimes and set investment/insurance goals. |
| July–September 2026 | Review first-quarter TDS, HRA evidence and declared investments. |
| October–December 2026 | Update bonus and other-income estimates; complete genuine shortfalls. |
| January–February 2027 | Submit correct proofs to employer and recheck TDS. |
| March 2027 | Final reconciliation; pay advance/self-assessment tax where applicable. |
Official References
- Income-tax Act, 2025, as amended by Finance Act, 2026
- Income Tax Department – Tax Rates
- Section 19 – Deductions from Salaries
- Official Old vs New Regime Calculator
Need Personalised Tax Planning?
Every salary structure is different. Contact BDPS Associates to compare both regimes, review eligible deductions and plan your FY 2026-27 taxes.
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Disclaimer: This educational article and calculator provide a simplified estimate based on information available for FY / Tax Year 2026-27. Tax treatment depends on residential status, income type, eligibility, documentation and amendments. Obtain professional advice before filing or investing.
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