Step 1: choose your regime
For most salaried people, the new regime costs less. A salary of up to ₹12.75 lakh pays no tax in it. The old regime wins only when your deductions are large:
| Yearly salary | Old regime wins if deductions (beyond the standard deduction) are more than about |
|---|---|
| ₹10 lakh | ₹4.5 lakh |
| ₹15 lakh | ₹5.44 lakh |
| ₹20 lakh | ₹7.08 lakh |
| ₹25 lakh | ₹8 lakh |
From our old vs new regime guide, for a resident under 60 with no other income.
Step 2: in the new regime
- Employer NPS: ask HR to move part of your CTC to NPS. Up to 14% of basic + DA is deductible, the biggest lever left.
- Standard deduction: ₹75,000, applied automatically.
- Tax-free pay that works in both regimes: employer gifts below ₹15,000 in the year, reimbursement for official use of your own car (₹5,000 or ₹7,000 a month for mixed use), and gratuity and leave encashment when you leave.
Step 3: in the old regime
| Deduction | Limit | Tax saved in the 30% slab |
|---|---|---|
| 80C (EPF, PPF, ELSS, insurance, home loan principal, tuition fees) | ₹1.5 lakh | ₹46,800 |
| NPS, extra (80CCD(1B)) | ₹50,000 | ₹15,600 |
| Health insurance (80D), self and family | ₹25,000 (₹50,000 if 60+) | ₹7,800 |
| Health insurance (80D), parents | ₹25,000 (₹50,000 if 60+) | ₹7,800 to ₹15,600 |
| Home loan interest, home you live in | ₹2 lakh | ₹62,400 |
| HRA | By formula | Depends on rent and basic |
Your own EPF often uses up most of the 80C limit already. Check what's left before buying anything.
Step 4: the dates
- Now: tell your employer your regime and declare your investments (Form 124, earlier Form 12BB).
- 15 December 2026: advance tax instalment, if you have other income.
- December to February: submit proofs when your employer asks.
- 31 March 2027: last day to invest or pay for this year's deductions.
- 31 July 2027: file your return. You can still change regime there.
What not to do
Don't buy insurance or lock money away just for a deduction. A deduction saves at most 30% (plus cess) of what you put in; the product still has to make sense on its own.
Common questions
How can a salaried person save tax in the new regime?
Mainly through your employer's NPS contribution, up to 14% of basic + DA, plus the ₹75,000 standard deduction and tax-free perks such as gifts below ₹15,000 a year.
When does the old regime save more?
When deductions beyond the standard deduction are large: about ₹4.5 lakh at a ₹10 lakh salary, rising to about ₹8 lakh at ₹25 lakh.
What is the last date for tax-saving investments for FY 2026-27?
31 March 2027.
Can I change my regime when filing my return?
Yes. Salaried people without business income can choose either regime in a return filed by the due date, usually 31 July.
Two ways to sort this
Do it yourself
- Compare both regimes with your salary and deductions in our calculator.
- Tell your employer your regime, and declare investments on Form 124.
- Use what your regime allows before 31 March 2027.
- Pay advance tax on 15 December if you have other income.
Let an expert do it
We plan your year: the regime, the deductions that make sense, and your declaration to HR.
The first chat is freeWork it out for yourself
- Income tax: old vs new: Which regime leaves more in your account.
- Salary in hand: Turn your CTC into the amount that reaches your bank.
- 80C planner: Use your ₹1.5 lakh 80C limit well.
- Health insurance (80D): Deduction for health insurance and check-ups.
- NPS: Your pension corpus and monthly pension.
- HRA exemption: How much of your HRA is tax-free.
- Home loan EMI: EMI, interest and the tax you save on a home loan.
Compare both regimes with your own salary and deductions.
Open the income tax calculatorSources
- Tax rules for salaried individuals, AY 2026-27, Income Tax Department
- Taxability of retirement benefits, Income Tax Department
- National Pension System and Atal Pension Yojana, Pension Fund Regulatory and Development Authority
This guide explains the rules in general. For your own situation, .