Old Tax Regime in India: Slabs, Rebates, and Deductions

The old tax regime in India is the optional income tax system that keeps the traditional slab rates and, in exchange, lets you shrink your taxable income through a long list of deductions and exemptions such as Section 80C investments, home loan interest, health insurance premiums, HRA, and NPS contributions. The new regime is the default from Assessment Year 2024-25 onward, so if you want the old one you have to choose it actively each year. Whether that choice saves you money comes down to a single question: do your deductions add up to enough that the higher slab rates still leave you paying less tax than the new regime would?

Slab Rates Under the Old Regime

The slabs are progressive and have not changed for AY 2026-27. They differ by age.

Individuals Below 60

Up to ₹2,50,000: nil
₹2,50,001 to ₹5,00,000: 5 percent
₹5,00,001 to ₹10,00,000: 20 percent
Above ₹10,00,000: 30 percent

The 30 percent rate is the ceiling and stays flat however high your income climbs.¹

Senior Citizens (60 to 79)

Up to ₹3,00,000: nil
₹3,00,001 to ₹5,00,000: 5 percent
₹5,00,001 to ₹10,00,000: 20 percent
Above ₹10,00,000: 30 percent

The basic exemption rises to ₹3 lakh; the rest of the structure mirrors the younger bracket.²

Super Senior Citizens (80 and Above)

Up to ₹5,00,000: nil
₹5,00,001 to ₹10,00,000: 20 percent
Above ₹10,00,000: 30 percent

Super senior citizens skip the 5 percent bracket entirely. Tax only begins once income crosses ₹5 lakh.²

The Section 87A Rebate

A resident individual whose total taxable income after all deductions does not exceed ₹5,00,000 can claim a rebate of up to ₹12,500 under Section 87A. That rebate exactly cancels the 5 percent tax on the ₹2.5 lakh to ₹5 lakh band, so a qualifying filer owes nothing before cess is even applied. Non-residents, HUFs, and entities other than individuals cannot claim it.

Deductions and Exemptions That Do the Work

The old regime only pays off because of what you can subtract from your income before the slab rates hit it. The following are the claims that move the most tax for most filers.

Standard Deduction

Salaried employees and pensioners get a flat ₹50,000 off taxable salary automatically, with no proof or investment required. Professional tax paid to the state, capped at ₹2,500 a year, is also deductible when computing salary income.

Section 80C — Up to ₹1,50,000

Section 80C covers a wide list of investments and payments: life insurance premiums, PPF and EPF contributions, tuition fees for up to two children, home loan principal repayment, ELSS funds, Sukanya Samriddhi deposits, NSCs, and five-year fixed deposits.³ Most salaried filers exhaust the ₹1.5 lakh limit through EPF and insurance alone; if you haven’t, a PPF top-up or ELSS purchase before March 31 fills the gap.

Section 80CCD(1B) — NPS Top-Up of ₹50,000

Voluntary contributions to the National Pension System earn an additional deduction of up to ₹50,000 over and above the ₹1.5 lakh 80C ceiling, taking the combined 80C-family claim to ₹2,00,000.⁴

Section 80D — Health Insurance

Health insurance premiums are deductible separately from 80C. The limits scale with age:

Self, spouse, and dependent children below 60: up to ₹25,000
Parents below 60: an additional ₹25,000
Parents who are senior citizens: an additional ₹50,000 instead
If you are yourself a senior citizen: your own limit rises to ₹50,000

A senior citizen insuring both themselves and their senior citizen parents can claim up to ₹1,00,000. Preventive health checkups count for up to ₹5,000 within these limits and can be paid in cash; regular premiums must be paid by non-cash means.

Section 24(b) — Home Loan Interest

Interest paid on a home loan for a self-occupied property is deductible up to ₹2,00,000 a year. Principal repayment is claimed separately under 80C. For a let-out property there is no cap on the interest deduction itself, though the overall loss from house property that can be set off against other income is capped at ₹2,00,000 a year. This deduction is a common reason homeowners with active loans stay in the old regime, since the new regime does not offer it for self-occupied property.

Section 80E — Education Loan Interest

The full interest on an education loan taken from a bank or approved financial institution is deductible, with no upper limit. The claim runs for up to eight years starting from the year repayment begins, or until the interest is fully paid, whichever comes first. The loan can be for you, your spouse, your child, or a student for whom you are the legal guardian. Loans from friends or relatives do not qualify.

Section 80G — Charitable Donations

Donations to approved charitable institutions and government relief funds are deductible under Section 80G. Some qualify for 100 percent deduction, some for 50 percent, and many are further capped at 10 percent of adjusted gross total income. Only monetary donations count; in-kind contributions do not.⁵

Sections 80TTA and 80TTB — Interest on Deposits

If you are below 60, Section 80TTA allows a deduction of up to ₹10,000 of savings account interest. Senior citizens get a bigger benefit under Section 80TTB: up to ₹50,000 covering interest from savings accounts, fixed deposits, and post office deposits combined.²

House Rent Allowance

If your employer pays HRA and you live in rented accommodation, part of that HRA is exempt under Section 10(13A). The exempt figure is the lowest of three: the actual HRA received, 50 percent of basic salary in a metro city (40 percent elsewhere), or rent paid minus 10 percent of basic salary. Metro cities for this purpose include Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, and Ahmedabad. For anyone paying serious rent in a big city, this exemption often runs into several lakhs and is one of the old regime’s most valuable benefits.

Leave Travel Allowance

LTA covers domestic travel and is exempt up to the amount your employer actually pays. You can claim it for two journeys within each four-year block. The current block runs from 2022 to 2025; the next covers 2026 to 2029. Only travel costs are covered, not hotels or meals.

Surcharge and Cess on Top

Once you have applied the slabs to your post-deduction income, two further layers can apply.

A surcharge kicks in once total income crosses ₹50 lakh: 10 percent of income tax between ₹50 lakh and ₹1 crore, 15 percent between ₹1 crore and ₹2 crore, 25 percent between ₹2 crore and ₹5 crore, and 37 percent above ₹5 crore. The 25 percent and 37 percent rates do not apply to long-term capital gains, short-term capital gains on equity, or dividend income; on those, the surcharge is capped at 15 percent. Marginal relief is applied automatically at each surcharge threshold so that a small rise in income cannot cause a disproportionately larger jump in total tax.¹

A flat 4 percent health and education cess is then charged on income tax plus surcharge. Everyone pays it, regardless of income; there is no exemption or marginal relief for the cess.⁶

When the Old Regime Actually Saves You Money

The new regime’s lower slab rates and expanded rebate on income up to ₹12 lakh make it the better choice for anyone with modest deductions. The old regime pulls ahead only once your total claims are large enough to overcome that gap, and where the crossover sits depends on your income.

At gross incomes up to about ₹12 lakh, the new regime almost always wins, because the old regime’s Section 87A rebate stops at ₹5 lakh of taxable income and provides much less relief at those levels. The old regime starts becoming competitive around ₹13 to ₹15 lakh of gross income, but only if your deductions cross roughly ₹5 to ₹5.5 lakh. At ₹20 lakh, you typically need total deductions and exemptions of around ₹7 lakh or more.

A salaried filer with a home loan (claiming ₹1.5 lakh of principal under 80C and ₹2 lakh of interest under Section 24(b)), substantial HRA, a family health insurance policy, and voluntary NPS contributions can realistically reach those thresholds. Someone whose only tax-saving activity is an EPF contribution and who does not pay rent almost certainly pays less under the new regime.

How to Opt Into the Old Regime

Because the new regime is the default, using the old one takes a positive step. What that step looks like depends on the source of your income.

If You Are Salaried Without Business Income

Tell your employer at the start of the financial year that you want TDS calculated under the old regime. Your employer will then apply the old slabs and factor in your declared deductions each month. If you forget, TDS defaults to the new regime, but you can still choose the old regime when filing your return by selecting it directly in the ITR. You are free to switch regimes every year.⁷

The standard due date for filing the ITR for AY 2026-27 (income earned in FY 2025-26) is July 31, 2026. A belated return can be filed until December 31, 2026, with a late fee of ₹5,000 where income exceeds ₹5 lakh, or ₹1,000 where it does not.⁸

If You Have Business or Professional Income

You must file Form 10-IEA electronically on the income tax e-filing portal before the due date under Section 139(1). Filing it late renders it invalid, and you are stuck with the new regime for that year.⁹ The form is required whether it is your first time choosing the old regime or you are returning to it.¹⁰

Switching Between Regimes and What a Missed Deadline Costs

Filers without business income can pick whichever regime suits them each year, choosing it in the ITR itself with no separate form. This annual flexibility lets you use the old regime in a year with a large home loan interest claim and switch back the next year if your deductions drop.⁷

Filers with business income get one round trip. Once you opt out of the new regime by filing Form 10-IEA, you can later return to the new regime, but after that switch back the door to the old regime closes permanently. The restriction exists because business income involves depreciation and other allowances that get complicated when regimes are flipped repeatedly.⁷

For business taxpayers, missing the Form 10-IEA deadline is the costliest slip. A late-filed form is treated as invalid and cannot be revised or withdrawn in the same assessment year; the only remedy is to file a fresh Form 10-IEA in the following assessment year.⁹ For salaried filers the stakes are lower because the regime is picked in the return, but a late return still triggers a Section 234F fee of ₹5,000 where income exceeds ₹5 lakh or ₹1,000 where it does not. If your income falls below the basic exemption limit, no fee applies.⁸

1
Income Tax Department. Salaried Individuals for AY 2026-27
2
Income Tax Department. Senior Citizens and Super Senior Citizens for AY 2026-2027
3
Income Tax Department. Deductions from Gross Total Income
4
National Pension System Trust. Tax Benefits under NPS
5
Income Tax Department. Section 80G – Deductions in Respect of Donations to Certain Funds, Charitable Institutions, Etc.
6
Income Tax Department. Domestic Company for AY 2026-27
7
Income Tax Department. FAQs on New Tax vs Old Tax Regime
8
Income Tax Department. Income Tax Returns
9
Income Tax Department. Form 10-IEA FAQ
10
Income Tax Department. Form 10-IEA – User Manual and FAQs