# New vs Old Tax Regime: The Complete 2026 Guide — Slabs, Capital Gains & What to Choose (FY26-27)

You just got your July salary slip. The tax deduction looks different. Your SIP redemption from last month will be taxed at a higher rate. And you have till March 31 to decide which tax regime saves you more money. Three things changed at once. Let me walk you through each one — and give you a calculator to figure out your exact savings in two minutes. Budget 2024 changed the rules on July 23. Three big shifts hit your wallet: 1. **STCG on equity/MFs jumped from 15% to 20%** — every short-term gain now costs more 2. **LTCG on equity/MFs went from 10% to 12.5%** — but the exemption rose from ₹1L to ₹1.25L 3. **New tax regime became the default** — with ₹75K standard deduction and ₹25K rebate (effectively tax-free up to ₹7.75L) Most people don't realize: the SIP you've been running for 5 years? It's not taxed as one block. Each monthly instalment is a separate lot. Some are LTCG, some are STCG. The math changes completely post-Budget. And the regime choice? It's not "new is always better." At ₹15L salary with a home loan and HRA, the old regime can save you over ₹1 lakh.

### What Changed in Budget 2024 (Effective July 23, 2024)

| Asset | STCG (Old) | STCG (New) | LTCG (Old) | LTCG (New) | Exemption |
|---|---|---|---|---|---|
| Listed equity shares | 15% | **20%** | 10% | **12.5%** | **₹1.25L** |
| Equity MFs (≥65% equity) | 15% | **20%** | 10% | **12.5%** | **₹1.25L** |
| Listed debt instruments | Slab | Slab | 20% with indexation | 12.5% no indexation | None |
| Property (bought before Jul 23) | Slab | Slab | 20% with indexation | **Lower of: 12.5% no indexation OR 20% with indexation** | None |

- *Grandfathering still works:*\* Units bought before Jan 31, 2018 use FMV on that date as cost basis. This applies lot-by-lot for SIPs.
- *Indexation is gone*\* for everything — flat 12.5% LTCG without indexation. Exception: property bought before July 23, 2024 — you can compute tax both ways and pay the lower amount.

### How SIP Taxation Actually Works (FIFO Method)

You invest ₹10,000/month for 24 months. At month 25, you redeem ₹2 lakh. Each monthly instalment = separate lot with its own purchase date and NAV. - *FIFO = First In, First Out.*\* The earliest units are sold first.

| SIP Month | Units Bought | Holding at Redemption | Type | Tax Rate |
|---|---|---|---|---|
| Month 1-12 | 12 lots | >12 months | **LTCG** | 12.5% above ₹1.25L |
| Month 13-24 | 12 lots | <12 months | **STCG** | 20% |

Your single redemption creates a **mixed bag** of LTCG and STCG. The first 12 months' units become LTCG and enjoy the ₹1.25L exemption. The recent 12 months get hit at 20%. - *Real example from Moneycontrol:*\* ₹50,000/month SIP for 60 months (₹30L invested), redeemed after 5 years.
- Pre-Budget tax: ₹77,456
- Post-Budget tax: **₹94,095** (21.5% increase)
- The jump comes mainly from STCG rate hike on recent instalments

### The ₹1.25L LTCG Exemption Shield

This is your free pass. Every financial year, the first ₹1.25 lakh of LTCG on equity/equity MFs is tax-free. - *How to use it:*\* If your portfolio has unrealised gains, sell just enough each year to book ₹1.25L of LTCG. Pay zero tax. Your cost basis resets to the current NAV. Next year, do it again.

This is called **gain harvesting**. It's legal. No wash sale rule in India — you can sell and rebuy the same fund the same day. ### Tax-Loss Harvesting Post-Budget 2024

| Loss Type | Offsets | Tax Saved per ₹1L (Old) | Tax Saved per ₹1L (New) | Gain |
|---|---|---|---|---|
| STCL (short-term) | STCG + LTCG | ₹15,000 | **₹20,000** | **+33%** |
| LTCL (long-term) | LTCG only | ₹10,000 | **₹12,500** | **+25%** |

- *Rules:*\*
- STCL can offset both STCG and LTCG
- LTCL offsets only LTCG
- Carry forward 8 years (must file ITR on time)
- **No wash sale rule** — instant rebuy allowed
- **Losses are set off first, then the ₹1.25L exemption applies to net LTCG**
- *Strategy:*\* Higher STCG rate (20%) makes short-term loss harvesting 33% more valuable. Every ₹1L of STCL harvested saves ₹20K now vs ₹15K pre-Budget.

---

## Old vs New Regime: The Calculator

### New Regime Slabs (FY24-25 / AY25-26)

| Income Slab | Tax Rate |
|---|---|
| 0 - ₹3,00,000 | Nil |
| ₹3,00,001 - ₹7,00,000 | 5% |
| ₹7,00,001 - ₹10,00,000 | 10% |
| ₹10,00,001 - ₹12,00,000 | 15% |
| ₹12,00,001 - ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |

- *Perks:*\* ₹75K standard deduction, 14% employer NPS deduction, ₹25K rebate u/s 87A (taxable income ≤₹7L = effectively tax-free to ₹7.75L)
- *Gone:*\* 80C, 80D, HRA, 24(b) home loan interest, 80CCD(1B), LTA, etc.

### Old Regime Slabs (Unchanged)

| Income Slab | Tax Rate |
|---|---|
| 0 - ₹2,50,000 | Nil |
| ₹2,50,001 - ₹5,00,000 | 5% |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |

- *Perks:*\* ₹50K standard deduction, ALL traditional deductions available

---

### Scenario Comparison

#### ₹10 Lakh Salary (No Major Deductions)

| Component | Old Regime | New Regime |
|---|---|---|
| Gross Salary | ₹10,00,000 | ₹10,00,000 |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Taxable Income | ₹9,50,000 | ₹9,25,000 |
| Tax (before rebate) | ₹52,500 | ₹42,500 |
| Rebate u/s 87A | ₹0 | ₹0 |
| **Final Tax** | **₹52,500** | **₹42,500** |
| **Winner** | — | **New saves ₹10,000** |

#### ₹15 Lakh Salary (Max Deductions: 80C ₹1.5L + NPS ₹50K + 80D ₹25K + HRA ₹2L + Home Loan ₹2L)

| Component | Old Regime | New Regime |
|---|---|---|
| Gross Salary | ₹15,00,000 | ₹15,00,000 |
| Std Deduction | ₹50,000 | ₹75,000 |
| 80C | ₹1,50,000 | — |
| 80CCD(1B) NPS | ₹50,000 | — |
| 80D | ₹25,000 | — |
| HRA Exemption | ₹2,00,000 | — |
| Home Loan 24(b) | ₹2,00,000 | — |
| **Total Deductions** | **₹6,75,000** | **₹75,000** |
| Taxable Income | ₹8,25,000 | ₹14,25,000 |
| Tax + Cess | ~₹78,000 | ~₹1,81,350 |
| **Winner** | **Old saves ~₹1.03L** | — |

#### ₹20 Lakh Salary (80C ₹1.5L + 80D ₹25K + HRA ₹3L + HL 24b ₹2L)

| Component | Old Regime | New Regime |
|---|---|---|
| Gross Salary | ₹20,00,000 | ₹20,00,000 |
| Total Deductions | ₹7,25,000 | ₹75,000 |
| Taxable Income | ₹12,75,000 | ₹19,25,000 |
| Tax + Cess | ~₹2,07,500 | ~₹3,01,950 |
| **Winner** | **Old saves ~₹94K** | — |

#### ₹50 Lakh Salary (Max deductions + high HRA + HL)

| Component | Old Regime | New Regime |
|---|---|---|
| Gross Salary | ₹50,00,000 | ₹50,00,000 |
| Total Deductions | ~₹8-9L | ₹75,000 |
| Taxable Income | ~₹41-42L | ₹49,25,000 |
| Tax + Cess | ~₹11.5-12L | ~₹12.8L |
| Surcharge | 10% (>₹50L TI) | **25% capped** (>₹5Cr TI) |
| **Winner** | **Old marginally better** | — |

---

### The 3-Question Decision Framework

- *Question 1: Is your gross income ≤ ₹7.75 lakh?*\*
- YES → **New regime** (zero tax due to rebate + standard deduction)
- NO → Go to Question 2
- *Question 2: Do you have a home loan with interest >₹1.5L/year OR HRA >₹1.5L/year?*\*
- YES → **Old regime** (these two deductions alone often outweigh new regime slabs)
- NO → Go to Question 3
- *Question 3: Can you claim ₹3.75L+ in total deductions (80C + 80D + NPS + HRA + 24b)?*\*
- YES → **Old regime**
- NO → **New regime**
- *Quick reference:*\*

| Income | Deductions Available | Recommended |
|---|---|---|
| ≤ ₹7.75L | Any | **New** |
| ₹7.75L - ₹12L | < ₹3.75L | **New** |
| ₹7.75L - ₹12L | > ₹3.75L | **Old** |
| ₹12L - ₹15L | < ₹4.5L | **New** |
| ₹12L - ₹15L | > ₹4.5L | **Old** |
| ₹15L - ₹20L | < ₹5.5L | **New** |
| ₹15L - ₹20L | > ₹5.5L | **Old** |
| >₹50L | Any | **Calculate** (surcharge cap differs) |

---

## Examples

### Example 1: Rahul, ₹12L Salary, Renting, No Home Loan

- 80C: ₹1.5L (PPF + ELSS)
- 80D: ₹25K (health insurance)
- HRA: ₹1.8L
- Total deductions: ₹3.55L
- *Verdict:*\* New regime saves ~₹9K. New regime taxable = ₹11.25L, tax = ~₹68.75K. Old regime taxable = ₹8.25L, tax = ~₹77.5K.

### Example 2: Priya, ₹18L Salary, Home Loan ₹2.5L Interest, HRA ₹2L

- 80C: ₹1.5L
- 80D: ₹25K
- HRA: ₹2L
- Home loan 24(b): ₹2L
- Total deductions: ₹5.75L
- *Verdict:*\* Old regime. Deductions (₹5.75L) > ₹5.5L breakeven at this income. Old saves ~₹85K.

### Example 3: Amit, ₹8L Salary, Just Started Career

- 80C: ₹50K (only EPF)
- No HRA, no home loan, no 80D
- *Verdict:*\* New regime. Zero tax. Old regime would charge ~₹23K.

---

## Action Steps: Do This Before March 31

### For Capital Gains

1. **Check your portfolio** — identify funds/stocks with unrealised LTCG >₹1.25L 2. **Harvest gains** — sell enough to book exactly ₹1.25L LTCG this FY. Rebuy immediately. Cost basis resets. 3. **Harvest losses** — if you have STCL, use it to offset STCG (saves 20% per rupee). LTCL offsets LTCG (saves 12.5%). 4. **Review SIP redemptions** — if you redeemed post-July 23, your tax is higher. Factor this in advance tax. ### For Regime Choice

1. **Download the calculator sheet** — plug in your salary, 80C, 80D, HRA, home loan interest 2. **Compare both regimes** — the sheet auto-calculates tax for old vs new 3. **Submit Form 10-IEA** (if choosing old regime with business income) or just select in ITR (salaried can switch annually) 4. **Tell your HR** — so TDS is deducted correctly from next month ### Quick Checklist

☐ Calculated LTCG/STCG for FY25 so far ☐ Booked ₹1.25L gain harvesting if eligible ☐ Harvested losses to offset gains ☐ Ran old vs new regime calculator with actual numbers ☐ Decided regime and informed HR/payroll ☐ Paid advance tax if capital gains pushed you over threshold ---

## Key Takeaway

- *Two minutes with a calculator saves you lakhs.*\*

The Budget 2024 changes aren't just headline numbers — they change how your SIP redemptions are taxed (FIFO creates mixed STCG/LTCG), make loss harvesting 33% more valuable, and flip the regime decision for anyone with a home loan or high HRA. - *Do this today:*\* Open the calculator. Plug in your numbers. Pick the regime. Tell HR. Harvest ₹1.25L gains before March 31.

Your future self will thank you when the tax notice doesn't arrive. ---

## Risks & Limitations

- Tax laws can change via Finance Act amendments
- SIP FIFO examples assume consistent monthly investment — lump sums change the math
- Grandfathering calculations need exact Jan 31, 2018 NAV — verify with AMC statement
- Regime choice for business income requires Form 10-IEA (once filed, can't switch back easily)
- Advance tax liability triggers if total tax >₹10K — capital gains count
- This is educational, not tax advice. Consult a CA for your specific situation

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## Sources

1. PIB Press Release PRID 2036604 — Budget 2024 capital gains changes 2. CBDT FAQs on Capital Gains Tax Provisions (Aug 12, 2024) 3. Income Tax Dept: New vs Old Regime FAQs (PDF) 4. Finance (No.2) Bill 2024 — Capital Gains Amendments 5. Moneycontrol: How Your SIPs Would Be Taxed After Budget 2024 6. Economic Times: SIP Taxation Under New Structure 7. ClearTax, Groww, TheCalcu, PlanMyReturns — regime calculators 8. TaxHarvestLab, ArthGyaan, DealPlexus — loss harvesting guides 9. Zerodha Z-Connect: What Changes for Investors After Budget 2024