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WORKBOOK
HRA + 80C Tax Saving Guide
Old Regime vs New Regime comparison for FY 2026-27 — with HRA exemption optimisation, all 80C/80D/80G/24(b) deductions, and a simple breakeven analysis to help you choose the right tax regime.
New Regime is default from FY 2024-25 onwards. To choose Old Regime, you must explicitly opt-out at time of ITR filing or by submitting Form 10-IEA (for business income). For salaried employees, inform employer via Form 12BB.
Tax Slabs Comparison: FY 2026-27
| Income Slab | New Regime Rate | Old Regime Rate |
|---|---|---|
| Up to ₹3,00,000 | Nil | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% | 5% (₹2.5L–₹5L) |
| ₹7,00,001 – ₹10,00,000 | 10% | 20% (₹5L–₹10L) |
| ₹10,00,001 – ₹12,00,000 | 15% | 30% |
| ₹12,00,001 – ₹15,00,000 | 20% | 30% |
| Above ₹15,00,000 | 30% | 30% |
Tax Rebate u/s 87A: New Regime — rebate up to ₹25,000 for income up to ₹12,00,000 (effective zero tax up to ₹12L). Old Regime — rebate ₹12,500 for income up to ₹5,00,000.
HRA Exemption Calculation
HRA exemption is available only under Old Regime. New Regime does not allow HRA deduction.
HRA Exemption = Least of these 3:
1. Actual HRA received from employer
2. Rent paid minus 10% of basic salary
3. 50% of basic (metro cities) or 40% of basic (non-metro cities)
Metro cities: Delhi, Mumbai, Kolkata, Chennai. Bangalore, Hyderabad, Pune are treated as non-metro for HRA purposes.
Major Deductions Under Old Regime
| Section | Deduction | Max Limit |
|---|---|---|
| 80C | LIC, PPF, ELSS, EPF, NPS (Tier-I), NSC, FD (5yr), children's tuition | ₹1,50,000 |
| 80CCD(1B) | Additional NPS contribution (over 80C) | ₹50,000 |
| 80D | Health insurance — self/family (₹25K) + parents (₹25K or ₹50K if senior) | ₹25,000–₹1,00,000 |
| 80G | Donations to approved funds/charities (50% or 100%) | Varies (with/without limit) |
| 24(b) | Home loan interest (self-occupied property) | ₹2,00,000 |
| 80E | Education loan interest (higher education) | No limit (8 years) |
| 80TTA | Savings account interest | ₹10,000 |
| 80TTB | Interest income for senior citizens | ₹50,000 |
| HRA | House Rent Allowance (see calculation above) | As per formula |
| Standard Deduction | Salaried employees | ₹50,000 |
Breakeven Analysis — When to Choose Old Regime
Use this table as a quick guide. If your total deductions + HRA exceed the breakeven amount, Old Regime saves more tax.
| Annual Income | Deductions needed to break even | Typically benefits |
|---|---|---|
| Up to ₹7.5 Lakh | Any deductions | New Regime (zero tax with 87A rebate up to ₹12L) |
| ₹10 Lakh | ₹1.75 Lakh+ | Old Regime if deductions high |
| ₹12 Lakh | ₹2.50 Lakh+ | New Regime has ₹12L rebate — compare carefully |
| ₹15 Lakh | ₹3.75 Lakh+ | Old Regime if HRA + 80C + 80D + 24(b) together > ₹3.75L |
| ₹20 Lakh+ | ₹4.50 Lakh+ | Old Regime typically benefits if home loan + HRA both present |
New Regime Deductions Still Allowed
- ✓Standard Deduction ₹75,000 — for salaried employees (increased from ₹50,000 in New Regime from FY 2024-25)
- ✓Employer NPS contribution (80CCD(2)) — up to 10% of salary (14% for Central Govt employees)
- ✓Gratuity exemption — ₹20 lakh limit
- ✓Leave encashment on retirement — up to ₹25 lakh
- ✓Retrenchment compensation — up to ₹5 lakh
- ✗NOT allowed: HRA, 80C, 80D, 80G, 24(b) home loan interest, LTA, professional tax
Choose the right tax regime and save more.
TaxClue’s CA team runs a personalised old vs new regime analysis for your income — and files your ITR to maximise savings.
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