Tax benefits decoded : Old vs new income tax regimes for FY 2025–26
Income Tax benefits decoded comparison of the old vs new income tax regimes for FY 2025–26
“Tax benefits decoded” offers a detailed comparison of the old vs new income tax regimes for FY 2025–26, helping taxpayers evaluate which regime is more beneficial based on their deductions and exemptions. Key Allowances Comparison: Old vs New Regime
| Allowance | Old Regime | New Regime | Cap / Notes | Documents Required |
| HRA | Yes | No | Per formula, max 50% of basic | Rent receipt, rental agreement, landlord’s PAN |
| Home loan interest | Yes | No | ₹2 lakh for self-occupied property | Interest certificate |
| LTA | Yes | No | 2 trips in 4 years | Travel tickets and boarding pass |
| Car lease | Yes | No | — | Lease agreement |
| Car fuel/maintenance | Yes | No | Taxable ₹1,800–2,400 (personal use) | Fuel bills, maintenance bills |
| Driver salary | Yes | No | ₹900/month perquisite (personal use) | Salary slips, driver employment agreement |
| Telephone | Yes | No | — | Post-paid bills in employee’s name |
| Meal card | Yes | No | ₹50 per meal | Usage statement |
| NPS | Yes | Yes | Old: 10% of basic (employee + employer), New: 14% of basic (employer only) | Transaction statement |
Note: Some benefits like HRA and home loan interest are conditionally available in the new regime.
Regime Comparison Table – Breakeven Analysis (FY 2025–26)
| Gross Salary | Breakeven Deduction | Tax Under Both Regimes |
| ₹7 lakh | ₹1.5 lakh | 0 under both regimes |
| ₹8 lakh | ₹2.5 lakh | 0 under both regimes |
| ₹10 lakh | ₹4.5 lakh | ₹81,900 |
| ₹14 lakh | ₹5.18 lakh | ₹81,900 |
| ₹16 lakh | ₹5.68 lakh | ₹1,13,100 |
| ₹20 lakh | ₹7.08 lakh | ₹1,92,400 |
| ₹24 lakh | ₹7.87 lakh | ₹2,92,500 |
| ₹25 lakh | ₹8 lakh | ₹3,09,000 |
| ₹30 lakh | ₹8 lakh | ₹4,75,800 |
| ₹50 lakh | ₹8 lakh | ₹10,99,800 |
| ₹1 crore | ₹8 lakh | ₹29,25,780 |
| ₹1.5 crore | ₹8 lakh | ₹48,52,700 |
| ₹2 crore | ₹8 lakh | ₹66,46,770 |
| ₹2.5 crore | ₹8 lakh | ₹91,74,750 |
| ₹5 crore | ₹8 lakh | ₹1,89,24,750 |
How to Choose the Best Regime?
- If deductions + exemptions > breakeven → Opt for Old Regime ✅
- If deductions + exemptions ≤ breakeven → Opt for New Regime ✅
Illustrative Example:
Gross Salary = ₹40 lakh and Deductions Claimed = ₹12.5 lakh
| Category | Amount (₹) |
| HRA | 10,00,000 |
| PPF/ELSS (80C) | 1,50,000 |
| NPS (80CCD) | 50,000 |
| Medical (80D*) | 50,000 |
| Total | 12,50,000 |
Since ₹12.5 lakh > ₹8 lakh breakeven for ₹40 lakh salary → Old Regime is better
Breakeven thresholds already include common deductions. So only additional benefits like HRA, home loan, etc., should be used to evaluate the better option.
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