Choosing Old or New Tax Regime for FY 25-26: Time to declare to employer | Choose wisely for Lower TDS

This is the time when employees are required to declare to employees whether to use the Old or New Tax Regime for TDS Deduction for Financial Year 2025-26 (Assessment Year 2026-27). Salaried employee is required to make decision wisely as Choosing wrong tax regime may result in High TDS and Less Take Home Salary.

Income Tax Slabs in New Tax Regime for Financial Year 2025-26 (Assessment Year 2026-27):

Income Tax Slabs in Old Tax Regime for Financial Year 2025-26 (Assessment Year 2026-27):

Salaried Taxpayers under New Tax Regime:

Salary Income of Rs.12,75,000 will be Tax-Free under the New Tax Regime. Salaried Taxpayers in New Tax Regime enjoy a Standard Deduction of Rs.75,000, Which means the Taxable Salary is Rs.12,00,000.

Rebate under Section 87A increased from Rs.25000 to Rs.60,000 under New Tax Regime with annual income up to Rs.12,00,000.

Therefore Total Tax will be Zero after the rebate.

Brief comparison between New and Old Tax Regime

When to choose New Tax or when to choose Old Tax Regime?

The new tax regime of Income Tax provides you with higher slab benefits, but the Old Tax regime provides you more deductions and exemptions. As per our analysis, For a taxpayer with a Salary income of Rs. 2400000, his deductions should be more than Rs. 800000, to opt for Old Tax Regime.

What if I declare the wrong regime and later found, another one more beneficial?

The employers don’t allow you to change the tax regime once opted. This means once you have opted for a regime, you can only change the same at time of Income Tax Return Filing. Thus it is very important that you make the decision wisely.