Should you opt for old or new tax regime in FY26–27? What draft IT rules tell you about tax savings?

With 1st April 2026 already effective, the Income Tax Act, 2025 and Income Tax Rules, 2026 are now in force, making the choice between the old and new tax regimes more critical for FY 2026–27. While tax slab rates remain unchanged, key changes in deductions and exemptions are influencing actual tax savings.

The old tax regime is regaining relevance due to enhanced scope of deductions such as HRA, Section 80C, 80D, and home loan interest. This makes it beneficial for taxpayers with structured salary and higher eligible deductions. The new tax regime, on the other hand, continues to offer lower tax rates with minimal compliance and no dependency on investments, making it suitable for individuals with limited deductions.

Example:

Vinod earns ₹15 lakh annually.

If he claims deductions of around ₹4 lakh (HRA, 80C, 80D, etc.), the old regime may result in lower tax.
However, if he has minimal or no deductions, the new regime would be more beneficial due to lower rates.

Should you opt for old or new tax regime in FY26–27? What draft IT rules tell you about tax savings?

Example:

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