How to interpret your result
The calculator shows your net tax liability under each regime after the Section 87A rebate (zero tax up to ₹12L net income under the new regime, ₹5L under old). The regime that shows lower tax is your better option — but there are two timing rules to know.
For salaried individuals: you can switch regimes every year at the time of filing your ITR. Choose whichever regime saves more that year.
For business owners (sole proprietors, freelancers, partners): once you opt into the old regime, switching back to the new regime is allowed only once in a lifetime. Make this decision carefully — ideally with a CA reviewing your full deduction picture before you file.
The breakeven deduction amount (the point at which old regime saves more) rises with income. At ₹10L income it's roughly ₹1.5L in deductions; at ₹20L it's roughly ₹3.75L. If your actual deductions exceed the breakeven, the old regime wins.
New vs old income tax regime: the business owner's decision
The income tax regime choice affects every rupee you earn. For salaried employees, the math is straightforward. For business owners, sole proprietors, and freelancers, the decision is more nuanced — and the stakes are higher.
FY 2025-26 new regime slabs
The Union Budget 2025 revised the new regime slabs, making it significantly more attractive:
| Income slab | Tax rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Section 87A rebate: Under the new regime, if your total income does not exceed ₹12 lakh, the entire tax liability (up to ₹60,000) is rebated. Effectively, zero tax up to ₹12 lakh.
FY 2025-26 old regime slabs
| Income slab (age < 60) | Tax rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5 lakh – ₹5 lakh | 5% |
| ₹5 lakh – ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Senior citizens (60–79): basic exemption ₹3 lakh. Super seniors (80+): ₹5 lakh.
What deductions can business owners claim?
Under the old regime, business owners can typically claim:
| Deduction | Section | Maximum |
|---|---|---|
| LIC, PPF, ELSS, home loan principal | 80C | ₹1,50,000 |
| Health insurance premium | 80D | ₹25,000 (₹50,000 senior) |
| Home loan interest (self-occupied) | 24(b) | ₹2,00,000 |
| NPS additional contribution | 80CCD(1B) | ₹50,000 |
| Education loan interest | 80E | Actual |
| Charitable donations | 80G | 50–100% of donation |
The new regime does not allow these deductions (except employer NPS contribution under 80CCD(2)).
When does the old regime win?
The breakeven depends on your income level. As a rule of thumb:
- Income ≤ ₹12L: New regime almost always wins (zero tax via rebate)
- Income ₹12L–₹20L: Old regime wins if total deductions exceed ~₹2–2.5L
- Income ₹20L–₹30L: Old regime wins if deductions exceed ~₹3L
- Income > ₹30L: High earners with maximum deductions (₹3.5L+) often prefer old regime