Earning 15 LPA? Here’s how much you can save in taxes in new and old regime

For years, a salaried employee earning ₹15 lakh a year had a straightforward tax strategy. Maximise investments, buy health insurance, contribute to the National Pension System (NPS), claim House Rent Allowance (HRA) and, where applicable, use home loan deductions to reduce taxable income.

But the government’s push towards the new tax regime has altered that equation.

The revamped tax slabs announced in Budget 2025, coupled with a higher standard deduction of ₹75,000 and a ₹4 lakh basic exemption limit, have made the new regime significantly more attractive for middle-income earners. As a result, many taxpayers are discovering that they can pay less tax without investing a single rupee in traditional tax-saving instruments.

For someone earning ₹15 lakh annually, the difference can be substantial.

Old vs new: How the two tax regimes differ

The new tax regime has been the default tax regime since FY24 and was made even more attractive in Budget 2025 through revised tax slabs and a higher basic exemption limit. It offers lower tax rates but restricts most deductions and exemptions.

The old regime, meanwhile, continues to reward tax planning. Investments in provident fund schemes, equity-linked savings schemes (ELSS), National Pension System (NPS) contributions, health insurance premiums, HRA exemptions and home loan benefits can all reduce taxable income.

“The new tax regime does not offer many tax-saving avenues. Apart from the ₹75,000 standard deduction, the higher basic exemption limit of ₹4 lakh and eligible employer contributions, there is very little available,” said Balwant Jain, tax and investment expert.

“The old regime continues to provide deductions such as HRA, LTA, Section 80C benefits, additional NPS deductions and medical insurance deductions,” he added.

New tax regime slabs (FY 2025-26)

At first glance, the lower rates under the new regime make it look like an obvious winner. However, the real comparison emerges only after calculating the impact of deductions available under the old regime.

Old tax regime slabs

What if you don’t claim any deductions?

Let’s start with a taxpayer who earns ₹15 lakh annually but does not claim deductions beyond the standard deduction available under each regime.

Under the new regime, the ₹75,000 standard deduction reduces taxable income to ₹14.25 lakh. Applying the slab rates results in a tax liability of ₹93,750. After adding the 4% health and education cess, the total tax payable comes to approximately ₹97,500.

In this scenario, the new regime leaves the taxpayer with a tax saving of nearly ₹1.6 lakh compared with the old regime.

The old regime becomes competitive only when deductions rise

The biggest advantage of the old tax regime is that it allows taxpayers to reduce their taxable income through a range of deductions and exemptions. While the new regime offers lower tax rates, the old regime rewards those who actively invest and spend in ways that qualify for tax benefits.

Some of the most commonly used deductions include investments under Section 80C, additional contributions to the National Pension System (NPS), health insurance premiums, home loan interest payments and exemptions such as HRA and Leave Travel Allowance (LTA).

Key deductions available under the old regime

For many taxpayers, these deductions can collectively reduce taxable income by several lakhs. However, the key question is whether the reduction is large enough to offset the lower tax rates available under the new regime.

A typical taxpayer may still pay less tax under the new regime

Consider a salaried employee earning ₹15 lakh annually who makes use of some of the most common deductions available under the old regime.

Suppose the taxpayer claims:

1. ₹1.5 lakh under Section 80C through investments such as , PPF or ELSS

2. ₹50,000 under Section 80CCD(1B) through additional NPS contributions

3. ₹25,000 under Section 80D towards health insurance premiums

Together, these deductions amount to ₹2.25 lakh.

After accounting for the ₹50,000 standard deduction available under the old regime, the taxpayer’s taxable income falls from ₹15 lakh to ₹12.25 lakh.

Tax calculation under the old regime after ₹2.25 lakh deductions

Under the old regime, the standard deduction is ₹50,000, leaving taxable income at ₹14.5 lakh. Because income above ₹10 lakh is taxed at 30%, the tax burden rises sharply. Including cess, the total liability works out to roughly ₹2.57 lakh.

Tax comparison at ₹15 lakh salary

tax than under the new regime, where the tax liability works out to about ₹97,500.

This is one of the biggest misconceptions among salaried taxpayers. Many assume that investing under Section 80C or contributing to automatically makes the old regime more attractive. In reality, the benefit of these deductions has to be weighed against the significantly lower tax rates available under the new regime.

So where does the old regime start making sense?

The answer lies in the total value of deductions and exemptions available to the taxpayer.

For an individual earning ₹15 lakh annually, the old regime generally starts becoming competitive when total deductions and exemptions move closer to ₹5 lakh or more. While the exact break-even point varies from person to person, taxpayers with substantial HRA exemptions and home loan benefits are often the ones most likely to benefit from staying in the old regime.

According to Jain, HRA remains one of the most valuable tax-saving provisions available to salaried employees.

“If a person earning ₹15 lakh has a basic salary of around ₹7.5 lakh, then up to 50% of the basic salary can be considered for HRA calculations in metro cities and 40% in non-metro cities,” he said.

For employees living in rented accommodation, HRA can significantly reduce taxable income depending on rent paid, salary structure and city of residence.

Home loan borrowers enjoy another major advantage under the old regime. Interest paid on a self-occupied house property can be claimed as a deduction of up to ₹2 lakh annually, often making a meaningful difference to the final tax bill.

LTA can provide additional relief as well. According to Jain, taxpayers can claim exemption on travel fare incurred for journeys within India, although hotel and accommodation expenses are not eligible.

Taken together, these benefits can narrow the gap between the two regimes and, in some cases, tilt the balance in favour of the old regime.

Who should choose which regime?

The new regime may suit you if:

• You do not have a home loan.
• You do not claim HRA.
• You have limited tax-saving investments.
• You prefer a simpler tax structure.
• You want higher take-home pay rather than locking money into tax-saving instruments.

The old regime may suit you if:

• You fully utilise Section 80C deductions.
• You contribute to NPS.
• You claim health insurance deductions.
• You receive a substantial HRA exemption.
• You have a home loan.
• You regularly claim multiple deductions and exemptions.

The bottom line

For most salaried employees earning ₹15 lakh annually, the new tax regime has become the default winner. Without substantial deductions, the tax outgo can be restricted to less than ₹1 lakh, compared with more than ₹2.5 lakh under the old regime.

The old regime remains relevant, but only for taxpayers who can meaningfully reduce their taxable income through a combination of deductions and exemptions. At this income level, the decision is no longer about choosing between two tax systems. It is about determining whether your deductions are large enough to compensate for the higher tax rates that come with the old regime.