₹5 Lakh Salary — Old vs New Tax Regime (AY 2026-27)
Which regime saves more for an annual salary of ₹5 Lakh? Here's the instant comparison using Budget 2025 slab rates.
Scenario 1: No Deductions (only standard deduction)
| Metric | Old Regime | New Regime |
|---|---|---|
| Gross Salary | ₹5,00,000 | ₹5,00,000 |
| Deductions | -₹0 | -₹0 |
| Taxable Income | ₹4,50,000 | ₹4,25,000 |
| Rebate u/s 87A | -₹10,000 | -₹1,250 |
| Total Tax | ₹0 | ₹0 |
Verdict: Old Regime saves ₹0 more tax without any deductions.
Scenario 2: With 80C (₹1.5L) + NPS (₹50K) + 80D (₹25K)
| Metric | Old Regime | New Regime |
|---|---|---|
| Gross Salary | ₹5,00,000 | ₹5,00,000 |
| Deductions | -₹2,25,000 | -₹0 |
| Taxable Income | ₹2,25,000 | ₹4,25,000 |
| Rebate u/s 87A | — | -₹1,250 |
| Total Tax | ₹0 | ₹0 |
Verdict: Old Regime saves ₹0 more tax with ₹2.25L in deductions.
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Tax Calculation Details for ₹5 Lakh Salary
For Assessment Year 2026-27 (Financial Year 2025-26), a salaried individual earning ₹5 Lakh per year would have a standard deduction of ₹75,000 under the New Regime and ₹50,000 under the Old Regime (Budget 2025 update).
Under the New Regime, the tax slabs are: Nil up to ₹4L, 5% on ₹4-8L, 10% on ₹8-12L, 15% on ₹12-16L, 20% on ₹16-20L, 25% on ₹20-24L, and 30% above ₹24L. A rebate under Section 87A makes income up to ₹12L effectively tax-free.
The Old Regime has higher rates (5% up to ₹5L, 20% ₹5-10L, 30% above ₹10L) but allows deductions under Sections 80C, 80D, 80CCD(1B), 24(b), HRA, and LTA — which can significantly reduce taxable income.
Bottom line: For ₹5 Lakh salary without deductions, the Old Regime is better. With full deductions (₹2.25L+), the Old Regime becomes better.
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Disclaimer: These calculations are estimates based on salary income only. Actual tax liability depends on your complete income profile, specific deductions, HRA, employer allowances, and other factors. Always verify with the full tool or a tax professional before filing.