Tax
Old vs new tax regime
India offers two ways to compute income tax on salary: the old regime with exemptions and deductions, and the new regime with lower slab rates and almost none.
The new regime, the default since FY 2023-24, has lower rates, a ₹75,000 standard deduction and a rebate that makes income up to ₹12 lakh tax-free from FY 2025-26, but no HRA, 80C or home-loan deductions.
The old regime keeps the deductions with higher rates. Employees pick one with their declaration each April and can switch yearly if they have no business income.
In Indian payroll
Payroll must compute TDS under the regime each employee chose and default to the new regime when no choice is recorded. A calculator that shows both is the most useful thing HR can send in April.
What is Old vs new tax regime?
India offers two ways to compute income tax on salary: the old regime with exemptions and deductions, and the new regime with lower slab rates and almost none.
Why does Old vs new tax regime matter in Indian payroll?
Payroll must compute TDS under the regime each employee chose and default to the new regime when no choice is recorded. A calculator that shows both is the most useful thing HR can send in April.
Related terms
In Kuzhu
The Payroll module in Kuzhu is where Old vs new tax regime is handled, on the same employee record as everything else.
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