Old vs New Tax Regime

India runs two parallel personal income tax regimes. The Old Regime, with slabs up to 30% but rich in deductions (80C, 80D, HRA, home loan interest, NPS, LTA). The New Regime, with lower slab rates but almost no deductions — a simpler system designed to be the default from FY 2023-24 onwards.

The break-even is not universal. A single earner with no home loan, no HRA and modest 80C usage is usually better off in the New Regime. A married earner with a home loan, HRA in a metro, full 80C, ₹50,000 NPS (80CCD(1B)) and ₹25,000 health premium is typically still better off in the Old Regime — sometimes by ₹1.5–2.5 lakh a year.

Compute it explicitly every April. Tax planning is not tax-saving-instrument shopping; it is choosing the regime that fits your life stage and then structuring within it. Salaried employees can switch regimes annually; business income earners can switch only once.

The deeper mistake is buying products for tax deduction alone. An endowment insurance policy sold as an 80C instrument locks up money for 20 years at 4–5% pre-tax returns — the deduction is worth ₹15,000 a year, the opportunity cost against ELSS or PPF is worth ₹40,000 a year. The tax tail should never wag the investment dog.

For high earners nearing the ₹50 lakh surcharge threshold and the ₹1 crore threshold, marginal relief and surcharge planning matter more than slab arithmetic. Consult a CA before December of each financial year — bonus timing, capital gains harvesting, and NPS Tier-I contributions can meaningfully change the number.