CA Naveen Pandey
CA + CS + CMA
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 level, the deductions you actually have in place, your employer’s structure, and sometimes your plans for the coming year. In our Vikaspuri practice serving 100+ Dwarka clients since 2014, we see this decision made incorrectly in both directions — people staying in the old regime when the new regime saves them more, and people defaulting to the new regime without realising how much HRA, home loan interest, and NPS deductions would have reduced their tax. This guide gives you the framework to calculate which regime saves more in your specific situation, with worked examples based on income profiles we see regularly in Dwarka.
What Changed — The New Tax Regime Explained for AY 2026-27
The new tax regime was made the default regime from AY 2024-25 onwards. That means if you do nothing — if you do not actively communicate a choice to your employer or file Form 10IEA — you are in the new regime. This catches many Dwarka salaried employees off guard, particularly those who have been investing in 80C instruments for years without realising their deductions are no longer being applied.
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 of ₹75,000 is available in both regimes. No other deductions — 80C, 80D, HRA, home loan interest, NPS employer contribution under Section 80CCD(2) (available in new regime), or LTA — are allowed under the new regime beyond a small set of exceptions.
Budget 2025 change
Rebate under Section 87A extended in new regime — for individuals with total income up to ₹12 lakh (after standard deduction), effective tax liability becomes nil. This is a significant reason why the new regime is genuinely competitive for 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% |
The old regime slabs look worse at first glance — a 20% slab starting at ₹5 lakh versus 5% in the new regime. But the old regime allows a full set of deductions that reduce the taxable income before these rates are applied. That is the mechanism: the slabs are higher, but the taxable base is much lower if you have significant deductions.
The Break-Even Calculation — When Does Old Regime Win
The practical question is not “which regime has better slabs” but “are my deductions large enough to offset the old regime’s higher slab rates?”
General rule from our Dwarka practice
If your total deductions (80C + 80D + HRA + home loan interest + NPS) exceed approximately ₹3.75 lakh for ₹12L salary or ₹4.5 lakh for ₹15L salary, the old regime typically saves more. Below those thresholds, default to the new regime.
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 ₹1,50,000 before cess. Old regime — assuming maximum deductions: Standard deduction ₹75,000 + 80C ₹1,50,000 + 80D ₹25,000 + Home loan interest 24b ₹2,00,000 + NPS 80CCD(1B) ₹50,000 = Total deductions ₹5,00,000. Old regime taxable income: ₹10,00,000. Old regime tax: approximately ₹1,12,500. At ₹15 lakh with full deductions, old regime saves tax.
For ₹20 lakh gross salary: At this income level, the old regime consistently outperforms for salaried employees who have home loan interest, HRA, full 80C, and NPS deductions in place.
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. Government employees who also have home loan interest, 80C investments, and HRA exemptions will typically find the old regime more beneficial in the ₹15L+ salary bracket. In fact, many Dwarka government employees we have worked with are unknowingly giving up ₹15,000 to ₹30,000 in additional NPS deduction benefit every year by defaulting to the new regime.
Old regime typically better above ₹15L
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. For someone paying ₹1.8 lakh to ₹2 lakh in home loan interest annually — common on a Dwarka flat purchased for ₹60-70 lakh — this deduction alone often makes the old regime more advantageous above ₹15 lakh salary.
Old regime typically better above ₹15L with home loan
Aviation sector employees near IGI Airport
Pilots and cabin crew based in Dwarka due to IGI Airport proximity often have high gross salary with significant allowances, some exempt under Section 10(14), and typically no HRA claim because they own property. Their primary deduction driver is usually Section 80C and NPS. At income levels above ₹20 lakh — common in this segment — the old regime typically remains better if 80C and NPS deductions are maximised. However, for aviation employees spending significant time abroad and classified as NRIs for the year, the regime choice interacts with residential status in ways that need case-specific assessment.
Old regime typically better above ₹20L — case specific for NRIs
Salaried employees earning up to ₹12 lakh in Dwarka
For this segment — which includes many junior PSU staff, school teachers, and administrative employees across Dwarka’s residential sectors — the new regime’s Section 87A rebate making income up to ₹12 lakh effectively nil-tax is almost universally better. Unless this individual has HRA exemptions larger than ₹1.5 lakh and a home loan running simultaneously, 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 adjusts TDS, but the final regime choice for income tax purposes is made at ITR filing through Form 10IEA.
Form 10IEA must be filed before the ITR due date — 31 July 2026 for salaried employees — if opting out of the new (default) regime for AY 2026-27.
Key rule for salaried employees: For those with no business income, the regime can be switched every year — you are not locked in. If you are in the new regime by default and want to switch to the old regime for AY 2026-27, file Form 10IEA before the ITR due date of 31 July 2026.
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 |
|
|---|---|---|
|
Default from AY 2024-25 |
No |
Yes |
|
Standard deduction |
₹75,000 |
₹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 |
High deductions (>₹3.75L) |
Low deductions, income ≤₹12L |
Worked examples — three Dwarka salaried employee profiles
Profile 1 — Junior government employee, ₹10 lakh salary
Deductions: Standard ₹75,000 + 80C ₹1,00,000 + 80D ₹15,000 + NPS 80CCD(1B) ₹50,000 = Total ₹2,40,000
New regime taxable income: ₹9,25,000. Tax: approximately ₹92,500
Old regime taxable income: ₹10L minus ₹2,40,000 = ₹7,60,000. Tax: approximately ₹75,500
Old regime saves approximately ₹17,000 here — but only marginally. For this employee, the decision depends on whether the NPS 80CCD(1B) benefit continues and whether they have home loan interest.
Profile 2 — Senior PSU engineer, ₹18 lakh salary, home loan running
Deductions: Standard ₹75,000 + 80C ₹1,50,000 + 80D ₹25,000 + Home loan interest ₹2,00,000 + NPS 80CCD(1B) ₹50,000 + HRA ₹1,20,000 = Total ₹6,20,000
New regime taxable income: ₹17,25,000. Tax: approximately ₹2,25,000
Old regime taxable income: ₹18L minus ₹6,20,000 = ₹11,80,000. Tax: approximately ₹1,54,000
Old regime saves approximately ₹71,000 — significant. This employee should actively opt for the old regime.
Profile 3 — MNC professional, ₹12 lakh salary, no home loan, minimal investments
Deductions: Standard ₹75,000 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: Same taxable income ₹11,25,000 with no additional deductions. Tax: approximately ₹1,12,500.
New regime saves approximately ₹1,12,500. 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 with home loan interest, HRA, and NPS deductions, the old regime often saves more.
Yes, if you are a salaried employee without business income. You can switch between old and new regime every year at ITR filing by filing or withdrawing Form 10IEA. Individuals with business income can only make this switch once.
Form 10IEA must be filed before the ITR due date — 31 July 2026 for salaried employees. Missing this deadline means you are in the new regime for that assessment 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 do this, you can still choose the old regime at ITR filing time — the TDS difference will result in a refund if excess was deducted.
For most government employees in Dwarka, particularly those with home loans and above ₹15 lakh salary, the old regime is typically better. The 80CCD(1B) NPS deduction of ₹50,000 beyond the 80C limit is available only in the old regime. Combined with home loan interest and full 80C, this often tips the calculation in the old regime’s favour.
Old regime is typically better. Home loan interest on a let-out property is fully deductible from house property income (no ₹2 lakh cap) in the old regime. This benefit is not available in the new regime. Property investors with rental income from a second Dwarka flat almost always benefit from the old regime.
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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