CA Naveen Pandey
CA + CS + CMA (AIR 5)
Founder : Naveen Pandey & Associates
This post is written from direct experience handling ITR for
Dwarka’s salaried professionals.
Old vs New Tax Regime — Which Is Better for Dwarka’s Salaried Professionals in 2025-26
Dwarka’s Guide for Salaried Professionals — By CA Naveen Pandey & Associates
The question every Dwarka salaried professional asks between April and July — old regime or new regime — has no single correct answer. It depends on your income, the deductions you actually have, your employer’s salary structure and your plans for the coming year. In our Vikaspuri practice serving 100+ Dwarka clients since 2014, we see this decision go wrong both ways. Some people stay in the old regime when the new regime saves them more. Others default to the new regime without realising how much HRA, home loan interest and NPS deductions would have saved. This guide shows how to calculate which regime saves more for you. The worked examples use income profiles we see often in Dwarka.
What Changed — The New Tax Regime Explained for AY 2026-27
The new tax regime became the default regime from AY 2024-25 onwards. That means if you do nothing — if you do not choose the old regime in your ITR filed by the due date — you are in the new regime. This catches many Dwarka salaried employees off guard. Some have invested in 80C for years without realising those deductions no longer apply.
For AY 2026-27, the new regime tax slabs are:
|
Income Slab |
New Regime Tax Rate |
|---|---|
|
Up to ₹4,00,000 |
Nil |
|
₹4,00,001 – ₹8,00,000 |
5% |
|
₹8,00,001 – ₹12,00,000 |
10% |
|
₹12,00,001 – ₹16,00,000 |
15% |
|
₹16,00,001 – ₹20,00,000 |
20% |
|
₹20,00,001 – ₹24,00,000 |
25% |
|
Above ₹24,00,000 |
30% |
Standard deduction is ₹75,000 in the new regime and ₹50,000 in the old regime. The new regime does not allow 80C, 80D, HRA, home loan interest or LTA. One exception is the employer’s NPS contribution under Section 80CCD(2), which is allowed.
Budget 2025 change
The Section 87A rebate was extended in the new regime. If your total income is up to ₹12 lakh (after standard deduction), your tax is nil. This is a big reason the new regime suits many Dwarka employees at or below this income level.
Old Regime Tax Slabs — AY 2026-27
|
Income Slab |
Old Regime Tax Rate |
|---|---|
|
Up to ₹2,50,000 |
Nil |
|
₹2,50,001 – ₹5,00,000 |
5% |
|
₹5,00,001 – ₹10,00,000 |
20% |
|
Above ₹10,00,000 |
30% |
At first glance, the old regime slabs look worse. Income just above ₹5 lakh is taxed at 20% in the old regime, but at only 5% in the new regime. However, the old regime allows a full set of deductions that reduce the taxable income before these rates apply. So the slabs are higher, but the taxable income is much lower if you have large deductions.
The Break-Even Calculation — When Does Old Regime Win
The real question is simple: are your deductions large enough to make up for the old regime’s higher slab rates?
General rule
The old regime saves more only if your total deductions (standard deduction + 80C + 80D + HRA + home loan interest + NPS) cross about ₹5.9 lakh at ₹15L salary. At ₹18L the figure is about ₹6.9 lakh, and at ₹20L about ₹7.6 lakh. Below those levels, the new regime is better. Up to ₹12L, the new regime gives nil tax.
For ₹12 lakh gross salary: Under the new regime, after standard deduction ₹75,000, taxable income is ₹11,25,000. With the Section 87A rebate extending to ₹12 lakh in the new regime, effective tax is nil. Under the old regime, even with maximum deductions, you cannot beat a nil tax outcome. For Dwarka salaried employees earning up to ₹12 lakh, the new regime is almost certainly better for AY 2026-27.
For ₹15 lakh gross salary: New regime taxable income (after ₹75,000 standard deduction): ₹14,25,000. Tax: approximately ₹93,750 before cess. Old regime — with these deductions: Standard deduction ₹50,000 + 80C ₹1,50,000 + 80D ₹25,000 + Home loan interest 24b ₹2,00,000 + NPS 80CCD(1B) ₹50,000 = Total deductions ₹4,75,000. Taxable income under the old regime: ₹10,25,000. Tax: approximately ₹1,20,000. So even with home loan, 80C, 80D and NPS, the new regime saves about ₹26,000 here. The old regime wins only with about ₹1.2 lakh more of HRA exemption.
For ₹20 lakh gross salary: The old regime wins only if total deductions cross about ₹7.6 lakh. That usually needs home loan interest, full 80C, NPS and a large HRA claim together.
Dwarka-specific scenarios — who benefits from which regime
After 11+ years of working with Dwarka salaried clients, these are the patterns we see consistently.
Government employees and PSU staff in Dwarka (NPS mandatorily enrolled)
Central government employees in Dwarka are mandatorily enrolled in NPS. Employer NPS contribution under Section 80CCD(2) — up to 14% of salary — is available in both regimes. That said, the additional ₹50,000 deduction under Section 80CCD(1B) is only available in the old regime. Above ₹15 lakh, the old regime can be better for them, but only when total deductions cross about ₹6 lakh. That needs home loan interest, full 80C, NPS 80CCD(1B) and a large HRA claim together. The 80CCD(1B) deduction itself saves at most about ₹15,600 a year (30% slab plus cess).
Old regime only with deductions of about ₹6 lakh+
Salaried professionals with home loans for Dwarka flats
Dwarka property purchases have been substantial over the past 8-10 years. Many salaried professionals in Sectors 10, 12, and 6 took home loans to buy flats, and those loans are still running. Section 24b home loan interest deduction of up to ₹2 lakh is available only in the old regime. Interest of ₹1.8 lakh to ₹2 lakh a year is common on a Dwarka flat bought for ₹60-70 lakh. This makes the home loan deduction a big part of the old regime case. On its own, though, it is not enough: total deductions still need to cross about ₹5.9 lakh at ₹15 lakh salary.
Old regime only with deductions of about ₹6 lakh+ with home loan
Aviation sector employees near IGI Airport
Pilots and cabin crew living in Dwarka near IGI Airport often have a high gross salary with large allowances. Some allowances are exempt under Section 10(14). Most do not claim HRA because they own their flat. Their primary deduction driver is usually Section 80C and NPS. At ₹20 lakh and above, 80C and NPS alone (₹2 lakh) are far below the break-even of about ₹7.6 lakh. So the new regime is usually better, unless there is also a home loan or HRA claim. However, aviation employees who spend long periods abroad may be NRIs for the year. For them, the regime choice also depends on residential status, so each case needs its own check.
New regime usually better — case specific for NRIs
Salaried employees earning up to ₹12 lakh in Dwarka
This group includes many junior PSU staff, school teachers and office staff across Dwarka’s residential sectors. For them, the new regime is almost always better, because the Section 87A rebate makes income up to ₹12 lakh nil-tax. The old regime can at best only match this (it needs about ₹7 lakh of deductions to reach nil tax), so the new regime wins clearly.
New regime clearly better up to ₹12L
How to switch between regimes — Form 10IEA explained
Many Dwarka salaried employees assume that telling their employer which regime to use is sufficient. It is not. The employer only adjusts TDS; the final regime choice is made when you file your ITR.
Salaried employees without business income do not need Form 10IEA. They opt for the old regime directly in the ITR, filed by the due date. For AY 2026-27, that date was 31 July 2026. Form 10IEA is needed only by individuals with business or professional income.
Key rule for salaried employees: if you have no business income, you can switch regime every year. You are not locked in. To choose the old regime, select it in your ITR filed by the due date. A belated return (filed by 31 December 2026 for AY 2026-27) is processed under the new regime only.
For individuals with business income, the switch can be made only once in a lifetime — from new to old. After switching back to new, they cannot return to old again. For salaried employees without business income, this restriction does not apply.
Practical step for Dwarka salaried employees
At the beginning of the financial year (April), calculate your expected deductions for the full year. Share your regime preference with your employer so they deduct correct TDS. If you choose a different regime at ITR filing time, you pay or claim the difference.
Old vs new regime — side by side comparison
|
Feature |
Old regime |
New regime |
|---|---|---|
|
Default from AY 2024-25 |
No |
Yes |
|
Standard deduction |
₹50,000 |
₹75,000 |
|
Section 80C |
₹1,50,000 |
Not available |
|
HRA exemption |
Available |
Not available |
|
Home loan interest 24b |
Up to ₹2,00,000 |
Not available |
|
Section 80D |
Available |
Not available |
|
NPS additional 80CCD(1B) |
₹50,000 |
Not available |
|
NPS employer 80CCD(2) |
Available |
Available |
|
LTA exemption |
Available |
Not available |
|
Section 87A rebate up to ₹12L |
Limited |
Yes — nil tax up to ₹12L |
|
Tax slabs |
Higher (20% from ₹5L) |
Lower (5% from ₹4L) |
|
Best for |
Very high deductions (about ₹6 lakh+) |
Low deductions, income ≤₹12L |
Worked examples — three Dwarka salaried employee profiles
Profile 1 — Junior government employee, ₹10 lakh salary
Deductions: Standard ₹50,000 + 80C ₹1,00,000 + 80D ₹15,000 + NPS 80CCD(1B) ₹50,000 = Total ₹2,15,000
New regime taxable income: ₹9,25,000. Tax: nil (Section 87A rebate, income below ₹12 lakh). Old regime taxable income: ₹10L minus ₹2,15,000 = ₹7,85,000. Tax: approximately ₹69,500.
New regime saves approximately ₹69,500 here. At ₹10 lakh salary, the new regime gives nil tax, so this employee should stay in the new regime even with NPS 80CCD(1B).
Profile 2 — Senior PSU engineer, ₹18 lakh salary, home loan running
Deductions: Standard ₹50,000 + 80C ₹1,50,000 + 80D ₹25,000 + Home loan interest ₹2,00,000 + NPS 80CCD(1B) ₹50,000 + HRA ₹1,20,000 = Total ₹5,95,000
New regime taxable income: ₹17,25,000. Tax: approximately ₹1,45,000. Old regime taxable income: ₹18L minus ₹5,95,000 = ₹12,05,000. Tax: approximately ₹1,74,000.
New regime saves approximately ₹29,000, even with a home loan, HRA and full 80C. At ₹18 lakh, the old regime wins only above about ₹6.9 lakh of total deductions. A larger HRA claim or parents’ health insurance under 80D can take you there.
Profile 3 — MNC professional, ₹12 lakh salary, no home loan, minimal investments
Deductions: Standard ₹50,000 only (no 80C investments, no home loan, no HRA claim as owns property)
New regime: ₹12L minus ₹75,000 = ₹11,25,000 taxable — Section 87A rebate makes effective tax nil.
Old regime: taxable income ₹11,50,000 with no other deductions. Tax: approximately ₹1,57,500.
New regime saves approximately ₹1,57,500. This employee has no reason to be in the old regime.
Frequently asked questions
No. It depends on your income level and deductions. For income up to ₹12 lakh with minimal deductions, the new regime is almost always better because of the Section 87A rebate. Above ₹15 lakh, the old regime saves more only with large total deductions: about ₹5.9 lakh at ₹15 lakh salary, ₹6.9 lakh at ₹18 lakh and ₹7.6 lakh at ₹20 lakh.
Yes, if you are a salaried employee without business income. You can choose the old or new regime every year in your ITR, filed by the due date. Individuals with business income use Form 10IEA and can switch back only once.
Salaried employees choose the old regime in the ITR filed by the due date (31 July 2026 for AY 2026-27). If you missed it and file a belated return by 31 December 2026, the new regime applies for that year.
Inform your employer of your regime choice at the beginning of the financial year. The employer will adjust TDS accordingly. If you did not, you can still choose the old regime in your ITR filed by the due date. Any extra TDS comes back as a refund.
For government employees in Dwarka, it depends on total deductions. The 80CCD(1B) NPS deduction of ₹50,000 is available only in the old regime. But the old regime wins only above the break-even: about ₹5.9 lakh of total deductions at ₹15 lakh salary. Many with a home loan and HRA reach it; many without do not.
It depends. In both regimes, home loan interest on a let-out flat is deducted from that flat’s rent. The difference is the loss. In the old regime, a house property loss can be set off against salary up to ₹2 lakh a year, and the rest carried forward. In the new regime, it cannot be set off against salary. So the old regime helps when the interest is higher than the rent.
CA Naveen Pandey
CA | CS | CMA | B.Com, Delhi University | ICAI Registered
CA Naveen Pandey is the founder of Naveen Pandey & Associates, a Vikaspuri-based chartered accountancy firm serving 100+ Dwarka clients since 2014. He holds CA, CS, and CMA qualifications simultaneously — clearing CA Final in the first attempt in 2012. He specialises in ITR filing, NRI taxation, GST compliance, and transfer pricing. CA Naveen Pandey personally reviews every client file before it is assigned to the team.
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