Tax Comparison Tool: Compare Old vs New Tax Regime
Our free Tax Comparison Tool helps you compare your tax liability under both old and new tax regimes to determine which option provides better tax savings based on your income and deductions.
Whether you're a salaried employee, business owner, or investor, this calculator provides comprehensive analysis of both tax regimes to help you make informed decisions about your tax planning strategy. Perfect for taxpayers, financial advisors, and anyone looking to optimize their tax liability legally.
Tax Comparison Tool
How to Use This Tax Comparison Tool
- Step 1: Select the financial year for which you want to compare tax regimes.
- Step 2: Enter your gross annual income from all sources including salary, business income, and other earnings.
- Step 3: Enter your eligible deductions under the old regime (80C, 80D, standard deduction, etc.).
- Step 4: Click "Compare Tax Regimes" to see side-by-side comparison and determine which regime offers better tax savings.
How Tax Comparison Tool Works
The Tax Comparison Tool uses current Indian income tax slabs and rules to calculate tax liability under both old and new tax regimes, providing accurate comparison for informed decision-making.
Old Tax Regime Calculation
Taxable Income: Gross Income - Standard Deduction - Section 80C - Section 80D - Other Deductions
Tax Slabs (2023-24):
Up to ₹2.5 lakh: 0%
₹2.5-5 lakh: 5%
₹5-10 lakh: 20%
Above ₹10 lakh: 30%
New Tax Regime Calculation
Taxable Income: Gross Income - Standard Deduction (₹50,000 only)
Tax Slabs (2023-24):
Up to ₹3 lakh: 0%
₹3-6 lakh: 5%
₹6-9 lakh: 10%
₹9-12 lakh: 15%
₹12-15 lakh: 20%
Above ₹15 lakh: 30%
Additional Components
Both regimes include 4% Health and Education Cess on total tax. Surcharge applies for higher income brackets. The tool calculates and compares total tax liability to recommend the better option.
Common Uses for Tax Comparison Tool
Annual Tax Planning and Strategy
Taxpayers use the comparison tool during annual tax planning to choose the optimal regime based on their income and available deductions. This helps in making informed decisions about investment choices and tax-saving strategies for the upcoming financial year.
Investment and Deduction Planning
Financial advisors and individuals use the tool to evaluate whether investing in tax-saving instruments under the old regime provides better benefits than the simplified new regime. This guides decisions about ELSS, PPF, life insurance, and other Section 80C investments.
Career and Salary Negotiations
Professionals use tax comparison during job changes or salary negotiations to understand the tax implications of different compensation structures. This helps in negotiating salary components and benefits that optimize overall tax liability.
Tips for Getting the Most Accurate Results
- Include All Income Sources: Enter your complete gross income including salary, rental income, capital gains, and other sources for accurate comparison between regimes.
- Consider Future Deductions: Factor in planned investments and deductions when comparing regimes. The old regime may become more beneficial with strategic tax-saving investments.
- Review Annually: Tax laws and your financial situation change over time. Review and compare regimes annually to ensure you're always choosing the most beneficial option.
Frequently Asked Questions
What is the difference between old and new tax regime?
The old tax regime allows various deductions under sections 80C, 80D, HRA, etc., but has higher tax rates. The new regime offers lower tax rates but allows fewer deductions (mainly standard deduction). The choice depends on your income level and available deductions.
Can I switch between tax regimes every year?
Yes, salaried employees can choose their preferred regime each financial year. However, business owners and professionals who opt for the new regime cannot claim depreciation on assets and must continue with the new regime for subsequent years unless they pay back the depreciation benefits.
Which regime is better for high-income earners?
It depends on your deductions. High-income earners with substantial investments in tax-saving instruments (80C, 80D, home loan interest) often benefit from the old regime. Those with minimal deductions may find the new regime more beneficial due to lower tax rates.
Are there any deductions available in the new tax regime?
The new tax regime allows limited deductions including standard deduction (₹50,000), employer's contribution to NPS, and interest on education loans. Most other popular deductions like 80C, 80D, HRA are not available in the new regime.
How accurate is this tax comparison calculator?
Our calculator uses current tax slabs and rules as per Indian Income Tax Act. However, it provides estimates for comparison purposes. For complex situations involving capital gains, business income, or multiple income sources, consult a qualified tax professional for detailed analysis.