New vs Old Tax Regime – Break even

Income If your deductions / allowances

are more than this amount - Old
Tax Regime is beneficial
(Salary – after standard deduction of (i.e. if your deductions / allowances aggregate to this amount, you
Rs. 50k; will pay equal amount of tax under both regimes)
Business : Profits and Gains from
Business / profession)
Up to 5 lakh Not Applicable
7 lakh 2 lakh
8 lakh 1.87 lakh
9 lakh 2.38 lakh
10 lakh 2.65 lakh
11 lakh 2.88 lakh
12 lakh 3.15 lakh
13 lakh 3.15 lakh
14 lakh 3.42 lakh
15 lakh and above 3.75 lakh
(Deductions / allowances include but not limited to 80C, 80D, HRA, Donations eligible u/s 80G, LTA
exemption, Interest on housing loan, education loan)

CA Nitesh G Buddhadev
New vs Old Tax Regime – Explanation
Example Ram Kapoor – Income from Salary Rs. 10.5 lakh. 80C deductions of Rs.
1.5 lakh and Housing loan interest of Rs. 1.15 lakh which aggregates to Rs. 2.65
lakh.
Old Tax Regime New Tax Regime
Taxable Income
Taxable Income
(after allowing all
(Only standard deduction
deductions)
of 50k allowed)
[10.5 lakh-50k-1.5 lakh-
[10.5 lakh-50k] Rs. 10 lakh
1.15 lakh] Rs. 7.35 lakh
Tax liability Rs. 60 Rs. 60
(For simplicity excluding surcharge and Tax liability
cess) thousand (For simplicity excluding surcharge and cess) thousand

As seen above, at Rs. 10.5 salary and net income of Rs. 10 lakh tax payable is
same under both regimes i.e. break even.

There are certain allowances / deductions which are available under the old
regime but not under the new regime such as HRA, Leave Travel Allowance,
80C, 80D, Housing loan interest, education loan interest, etc. If aggregate of any
of the above deductions / allowances is more than Rs. 2.65 lakh Ram Kapoor
should select Old Tax Regime else he is better off with New Tax Regime.

We have given this break even amount for all ranges of income in the chart.

CA Nitesh G Buddhadev
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