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Personal Finance News

Salary up to ₹20 lakh: How much deduction you need to benefit from old tax regime in FY 2026-27

rajeev kumar
By Rajeev Kumar

3 min read | Updated on March 02, 2026, 19:36 IST

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SUMMARY

While the new tax regime is best for income up to ₹12 lakh, deductions in the range of ₹5 lakh to ₹8 lakh may result in lower taxes under the old tax regime if your income is above ₹13 lakh.

income tax calculation 2026

Under the old tax regime, you can claim a standard deduction of ₹50,000. | Image source: Shutterstock

The old tax regime may become slightly more attractive for some salaried taxpayers if the draft Income-tax Rules 2026 are implemented. However, to actually make the most of the old regime, a taxpayer will need to be eligible for higher deductions. Otherwise, the new tax regime will be better in most of the cases, especially for taxpayers whose taxable salary, excluding capital gains from equity, is not more than ₹12 lakh.
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As the new financial year 2026-27 approaches, this article provides a quick guide on how much deduction you may need to make the old tax regime work in your favour.

How much deductions you may need

Typically, the old regime may be beneficial if you can claim deductions in the range of ₹5 lakh to ₹8 lakh or more.

While the new tax regime is best for taxable salary income up to ₹12 lakh, deductions in the range of ₹5 lakh to ₹8 lakh may result in lower taxes under the old tax regime if your income is above ₹13 lakh.

Last year, we calculated the deduction levels at which the old regime becomes more tax-efficient at different income levels. Since there has been no change in tax rates and slabs for FY 2026-27, we are reproducing those estimates below, as they continue to be relevant for FY 2026-27.
IncomeDeduction needed for old regime to be better
₹14 lakh₹5.5 lakh or more
₹15 lakh₹5.5 lakh or more
₹16 lakh₹6 lakh or more
₹17 lakh₹6.5 lakh or more
₹18 lakh₹6.5 lakh or more
₹19 lakh₹7 lakh or more
₹20 lakh₹7.5 lakh or more

What deductions can you claim?

Under the old tax regime, you can claim a standard deduction of ₹50,000 if you are a salaried person or a pensioner. Apart from this, you can claim the following deductions;

Up to ₹1.5 lakh under Section 80C

Up to ₹1 lakh for health insurance premiums (including senior citizen coverage) under Section 80D

Up to ₹2 lakh interest paid on home loans

House rent allowance and more.

In FY 2026-27, you will have to submit proof or evidence to claim various deductions. It may also not be practical for all taxpayers to claim all available deductions. Therefore, it would be better to do a proper assessment of your tax liability and choose your tax regime. The following income-tax calculator will help you do that assessment.

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About The Author

rajeev kumar
Rajeev Kumar is a Deputy Editor at Upstox, and covers personal finance stories. In over 11 years as a journalist, he has written over 2,000 articles on topics like income tax, mutual funds, credit cards, insurance, investing, savings, and pension. He has previously worked with organisations like 1% Club, The Financial Express, Zee Business and Hindustan Times.

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