Should I choose the old tax regime or the new tax regime under Section 115BAC

Question

I keep hearing about the old and new tax regimes and I do not know which one benefits me as a salaried employee with home loan and insurance deductions. Specifically, I want to know how Income-tax Act, 1961, Section 115BAC applies to a situation like mine and what the tax law position in India actually is. If there is a deadline I should be aware of, I need to know that now.

MyVakeel Legal Desk · Accepted Answer

Should I choose the old tax regime or the new tax regime under Section 115BAC is governed in India primarily by Income-tax Act, 1961, Section 115BAC, Income-tax Act, 1961, Section 80C and Income-tax Act, 2025. Outcomes in 115bac disputes depend heavily on documentation, so check what you can actually evidence as you read.

Section 115BAC of the Income-tax Act, 1961 provides a concessional slab-rate structure, referred to as the new regime, which is now the default regime for individuals and Hindu Undivided Families, in exchange for foregoing most exemptions and deductions such as Section 80C investments, Section 80D health insurance premium, and house rent allowance exemption under Section 10(13A).

Taxpayers with substantial deductions such as home loan interest under Section 24(b), Section 80C investments, and medical insurance under Section 80D often find the old regime more beneficial, while those with few deductions typically pay less tax under the new regime, so the choice depends entirely on your individual deduction profile and should be recalculated each year.

Salaried individuals and pensioners without business income can switch between the old and new regime every year simply by indicating their choice while filing the return, whereas individuals with business or professional income face restrictions on switching back to the old regime once they opt out, under the proviso to Section 115BAC.

If you do not explicitly opt for the old regime while filing your return, the new regime under Section 115BAC applies by default, so salaried employees who want to claim old-regime deductions must actively select the old regime option in the return form or with their employer at the start of the financial year for TDS purposes.

What to do next: 1) List all deductions you are eligible for under the old regime; 2) Compute tax liability under both regimes using the current slabs; 3) Inform your employer of your chosen regime for TDS purposes; 4) Confirm your final choice while filing the annual return.

If you are unsure whether your facts fall inside Income-tax Act, 1961, Section 115BAC, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in tax law.