Old vs New Tax Regime: Why 28% of Indians Still Refuse to Switch in 2026
Despite the government’s aggressive push toward the “New Tax Regime,” nearly 28% to 29% of Indian taxpayers are still sticking to the Old Regime. According to the 2026 Henley-equivalent tax data from Deloitte India, a “meaningful minority” finds massive savings through deductions that the new system simply doesn’t offer.
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If you are earning between ₹15 lakh and ₹30 lakh, choosing the wrong regime could cost you lakhs in “lazy tax.” Here is the mathematical “Golden Opportunity” to save your hard-earned money.
The ₹25 Lakh Question: Where Do You Save?
For high-income earners, the decision isn’t about simplicity; it’s about arithmetic. Expert analysis from Nitin Bajal (Deloitte India) highlights a specific “Break-Even Point.”
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Gross Income: ₹25,00,000
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The Break-Even Number: ₹8.5 Lakh
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The Verdict: If your total deductions (HRA, 80C, Home Loan, etc.) exceed ₹8.5 lakh, the Old Regime is your best friend. If they are lower, the New Regime wins.
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The “Power Players” of the Old Regime
Why does the Old Regime refuse to fade away? It’s because of these “High-Value” deductions that the New Regime (as of the 2025-26 Budget) does not support:
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Section 80E (Education Loans): The most powerful tool. There is no upper limit on the interest you can deduct for up to 8 years.
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Section 24 (Home Loans): A flat ₹2 lakh deduction on interest for self-occupied properties.
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HRA (House Rent Allowance): For salaried individuals in cities like Mumbai or Delhi, this can be a massive tax shield.
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Section 80D (Health Insurance): Up to ₹50,000-₹1,00,000 for self and senior citizen parents.
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2026 Tax Slab Comparison: At a Glance
| Income Bracket | New Regime Rate (Default) | Old Regime Rate (Optional) |
| Up to ₹4 Lakh | Nil | Nil (up to ₹2.5L) |
| ₹4L – ₹8L | 5% | 5% |
| ₹8L – ₹12L | 10% | 20% |
| ₹12L – ₹24L | 15% – 25% | 30% (above ₹10L) |
| Above ₹24L | 30% | 30% |
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Pro-Tip: Under the New Regime, if your taxable income is up to ₹12 Lakh, your tax is ZERO thanks to the enhanced Section 87A rebate. This makes the Old Regime irrelevant for most middle-class earners with fewer investments.
Who Should Stick to the Old Regime?
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The Homeowner: If you are paying heavy EMI interest.
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The Student/Parent: If you have a large education loan for studies in India or abroad.
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The Big Investor: If you max out 80C, 80D, and NPS (80CCD) every single year.
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The Renter: If your HRA component is a significant part of your salary package.
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