Old vs new tax regime: Which will help you save more on a ₹14 lakh salary in FY 2026-27?

If you are earning around ₹14-15 lakh a year, you have probably heard people often discussing whether the old tax regime or the new one is better for them.

According to CBDT data, 88% of taxpayers have already moved to the new tax regime, attracted by its lower rates, but for people with significant tax-saving investments and allowances, the old tax regime might still save them more in FY 2026-27 if the proposed changes in draft Income-tax Rules 2026 are implemented.

So, which one will save you more tax? Let’s break it down in simple numbers using a ₹14 lakh salary example

Suppose you get the following from your employer and you are based in Pune:

You can get exemption on these allowances only if they form a part of your salary package. These are not deductions that you can claim even if they are not a part of your package.

Please note that draft Income-tax Rules 2026 are currently open for public feedback and they may see some changes before final implementation with effect from April 1, 2026.

Based on the given assumptions, your gross salary is ₹14 lakh, out of which ₹7 lakh is basic pay. For HRA calculation, salary is considered as Basic + DA, which in your case is ₹7 lakh. You receive ₹3,50,000 as HRA and pay ₹3,60,000 as annual rent. Since you live in Pune, it is treated as a non-metro city under the current old regime, but is considered a metro city under the proposed draft Income-tax Rules 2026.

The children’s education allowance is proposed to increase from ₹ 100 to ₹3,000 per month per child (for a maximum of two children). Similarly, the hostel expenditure allowance rises from ₹300 to ₹ 9,000 per month per child. However, not all companies give these allowances, so the actual tax benefit depends on your salary package

In comparison, the new regime allows only a standard deduction of ₹75,000 and does not permit HRA or children's allowance exemptions. As a result, your taxable income under the current old regime is ₹10,65,200 with a tax liability of ₹1,37,342.

Under the draft old regime, taxable income reduces to ₹9,16,000 and tax drops to ₹99,528. This results in a tax saving of ₹37,814.

Under the new regime, individuals earning up to ₹12 lakh annually do not have to pay any income tax.

₹0-4 lakh: Nil

₹4-8 lakh: 5%

₹8-12 lakh: 10%

₹12-16 lakh: 15%

₹16-20 lakh: 20%

₹20-24 lakh: 25%

Above ₹24 lakh: 30%

The old tax regime continues with its traditional slab structure:

Up to ₹2.5 lakh: Nil

₹2.5-5 lakh: 5%

₹5-10 lakh: 20%

Above ₹10 lakh: 30%

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Let's try to understand the new tax regime now

Under the new regime, your gross salary is ₹14,00,000. After applying the standard deduction of ₹75,000, your taxable income comes down to roughly ₹13,25,000. Based on the new tax slabs, this results in a tax of around ₹78,750.

So, what is better for a person with a ₹14 lakh or ₹15 lakh salary?

"If a person has very few deductions, the new regime usually gives lower tax because of the reduced rates. If the person gets good HRA and other allowances and can fully use deductions like 80C, 80D, home-loan benefits, then the old regime may save more, especially after the proposed increase in limits," said Abhishek Soni, CEO & Co-founder, Tax2win.

If you have significant HRA, children’s allowances, or other deductions, the draft old regime 2026 could save you around ₹37,000 compared to the current old regime. If you have few deductions, the new regime’s lower rates may still work better. It's always better to consult a tax expert to understand what's better for you.

Disclaimer: This article is written purely for informational purposes and should not be considered investment advice from Upstox. Investors should do their own research or consult a registered financial advisor before making investment decisions.