Tax & salary

Old vs new tax regime: work a CTC without an email wall

The fight is rarely “which regime is morally better.” It is whether your 80C + HRA stack beats a cleaner slab chart. For FY 2026–27 the new regime still climbs from a ₹4 lakh nil band through 5 / 10 / 15 / 20 / 25 / 30, with ₹75,000 standard deduction for salaried people and a Section 87A rebate story up to ₹12 lakh taxable (cap ₹60,000). The old regime keeps a smaller standard deduction and the classic deduction stack. Confirm the live chart on the Income Tax Department site if you are reading this after a Budget.

Open the salary calculator, type one CTC, and read both columns. The sketch is deliberately boring: about 45% basic, PF at 12% of that basic, a Maharashtra-ish professional tax cap, HRA exemption only on the old-regime side. It exists so the comparison is fair, not so it matches your Form 16.

When new usually wins

You rent little or nothing. You do not max 80C. You do not have a housing-loan interest stack. Taxable income after the new-regime standard deduction sits near or under the 87A window. At ₹12 lakh CTC, the new-regime column often collapses tax in the simplified model. That is the Slack argument. It is also why the default regime changed.

When old can still win

You pay real metro rent, you max 80C, you have NPS or housing interest that the old regime still cares about, and the annual gap is larger than your bonus variance. At ₹24 lakh CTC the higher bands dominate. Old regime plus actual deductions can still beat a clean slab. If the gap is ₹8,000 a year, you bought a hobby, not a strategy. File on time.

Worked example: ₹12 lakh CTC

Enter 1200000 on the salary page. New-regime taxable after the ₹75,000 standard deduction sits near the 87A window in the sketch. Old regime without stuffed 80C still owes something. If your offer’s basic is 30% of CTC, not 45%, the PF and HRA lines are wrong and the delta is theatre. Read the annexure before you celebrate.

Worked example: ₹24 lakh CTC, renter

Run it once with the default sketch. Then ask: is my rent real enough that HRA exemption on the old side would move the needle by more than a month of groceries? If you cannot answer from the rent receipts you already have, you do not have an old-regime case. You have a vibe.

What this note adds that the calculator does not

The tool is a two-column machine. This note is the decision rule I actually use: if the annual gap is smaller than bonus variance, stop optimizing. New regime is the default; opting into old is a paperwork choice, not a personality. Senior-citizen extras are mostly an old-regime feature; new-regime slabs are uniform for individuals in the model I ship. Surcharge, ESOPs, and employer NPS are out of scope on both pages.

If you already know taxable income, skip CTC theatre and use the income tax calculator. For the three numbers recruiters blur, see CTC vs in-hand vs Form 16.

The 87A cliff

The slogan “₹12.75 lakh tax-free for salaried” folds the ₹75,000 new-regime standard deduction into a ₹12 lakh taxable 87A window. It is directionally useful. It is not a statute title. One rupee of taxable income over the rebate window and the story changes. That is why people re-check Form 16 line items in March. If you are sitting on that cliff with two employers, arrears, or capital gains, a browser box is the wrong instrument. Use it to see the cliff. Use a CA spreadsheet to stand on it.

New regime is the default. Opting into old is a paperwork choice you make with payroll, not a personality. Senior-citizen extras are mostly an old-regime feature in the model I ship. New-regime slabs are uniform for individuals. Confirm on the Income Tax Department portal if you are reading this after a Budget.