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Life cover + investment option | Market-linked growth | Tax benefits
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On a Rs. 15 lakh annual income, you'd pay around Rs. 97,500 in tax under the current new regime, or Rs. 1,30,000 under the old regime if you claim Rs. 2.5 lakh in deductions.
- New regime (FY 2025-26 slabs): a Rs. 75,000 standard deduction applies; total tax liability works out to Rs. 97,500, including 4% cess.
- Old regime: with Section 80C, 80D, NPS, and home loan interest deductions of Rs. 2.5 lakh, taxable income drops to Rs. 12,50,000, bringing total tax to Rs. 1,30,000.
- The new regime now works out roughly Rs. 32,500 cheaper than the old regime at this income level.
- Under the new regime, the Section 87A rebate makes taxable income up to Rs. 12.75 lakh effectively tax-free, once the standard deduction is applied.
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What Is the exact tax on Rs. 15 lakh income?
| Regime | Taxable Income | Total Tax (incl. 4% cess) |
|---|---|---|
| Old regime (with Rs. 2.5L deductions) | Rs. 12,50,000 | Rs. 1,30,000 |
| New regime (FY 2025-26, after standard deduction) | Rs. 14,25,000 | Rs. 97,500 |
At this income level, the new regime now works out cheaper by roughly Rs. 32,500 a year — a reversal from earlier years, when the new regime's narrower slabs made the old regime more competitive for those claiming deductions.
Which tax regime applies by default?
As a working individual, your income is taxed according to the slab rates announced in each year's Union Budget. Under Section 115BAC of the Income Tax Act, 1961 (and its successor, the Income Tax Act, 2025, effective from 1st April 2026), you can choose between the old and new tax regimes.
The new tax regime applies by default unless you actively opt for the old one. Using an income tax calculator can help you compare both before deciding, since the better option depends on how many deductions you can genuinely claim.
Pro Tip
Old vs new tax regime: Slab comparison
Old Tax Slabs
| Income Range | Rate | Max Tax per Slab |
|---|---|---|
| Up to Rs. 2.5 lakh | Nil | — |
| Rs. 2.5L – 5L | 5% | Rs. 12,500 |
| Rs. 5L – 7.5L | 10% | Rs. 37,500 |
| Rs. 7.5L – 10L | 15% | Rs. 75,000 |
| Rs. 10L – 12.5L | 20% | Rs. 1,25,000 |
| Rs. 12.5L – 15L | 25% | Rs. 1,87,500 |
| Above Rs. 15L | 30% | Per annual income |
A 4% cess applies on top of slab tax in both regimes, and surcharge (capped at 25%, applicable on net taxable income exceeding Rs. 50 lakh annually) applies at higher income levels.
New Tax Slabs — FY 2025-26 (AY 2026-27), currently applicable
| Income Range | Rate |
|---|---|
| Up to Rs. 4 lakh | Nil |
| Rs. 4 lakh – Rs. 8 lakh | 5% |
| Rs. 8 lakh – Rs. 12 lakh | 10% |
| Rs. 12 lakh – Rs. 16 lakh | 15% |
| Rs. 16 lakh – Rs. 20 lakh | 20% |
| Rs. 20 lakh – Rs. 24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
A standard deduction of Rs. 75,000 applies under the new regime, on top of the slab structure. These slabs, introduced in Budget 2025, continue to apply for FY 2026-27 as well, with no changes announced in Budget 2026.
Key differences between the two regimes
- The old regime has a minimum slab rate of 5% and a maximum of 30%, spread across six income brackets.
- The new regime (FY 2025-26 onward) now has seven income brackets — a revised structure that replaced the earlier six-slab system to improve tax progression.
- The old regime allows deductions under Section 80C, 80D, 80CCD, and others.
- The new regime offers a Rs. 75,000 standard deduction and Section 80CCD(2) benefits, but removes most other deductions and exemptions.
- The Section 87A rebate under the new regime was raised to cover taxable income up to Rs. 12 lakh (making total tax-free income effectively Rs. 12.75 lakh with the standard deduction) — a significant increase from the earlier Rs. 7 lakh threshold.
- This combination of a higher exemption threshold and restructured slabs has made the new regime considerably more competitive, even for taxpayers who would otherwise claim deductions under the old regime.
How can you save tax on a Rs. 15 lakh salary?
Several tax-saving instruments under the Income Tax Act can reduce your taxable income — but these deductions are only available under the old regime.
Deductions available under the Old Regime (Section 80C, 80CCC, 80CCD)
You can claim up to Rs. 1.5 lakh in deductions through:
Financial protection instruments
- Term insurance — offers high coverage at low premiums and qualifies for deductions under Section 80C, helping secure your family's financial stability.
- Life insurance — endowment and money-back plans combine life cover with guaranteed savings and maturity benefits.
- ULIPs — combine insurance with market-linked returns; premiums are deductible under Section 80C, and maturity proceeds may be tax-free under Section 10(10D), subject to conditions.
Maximise your tax savings while securing your family — explore life insurance plans and get a quote.
Retirement and long-term instruments: PPF, EPF, ULIPs, pension/annuity plans, NPS Tier-I, SCSS, real estate.
For your child's future
- Sukanya Samriddhi Scheme
- Child insurance plans — combine investment and protection; premiums qualify for Section 80C, and the payout helps secure your child's future in your absence.
Consider starting a life insurance-backed child plan early — it grows with your child and your tax benefits. Get a quote.
Wealth protection: NSC, 5-year tax-saving deposits, life insurance endowment and money-back plans.
Additional Rs. 50,000 via Section 80CCD
- Salaried individuals: standard deduction of 10% of monthly salary (14% for government employees and bankers).
- Self-employed individuals: up to 20% of annual income.
- An additional Rs. 50,000 contribution beyond the statutory limit is also deductible.
Up to Rs. 75,000 via Section 80D (Health Insurance)
| Cover | Premium Limit |
|---|---|
| Self and family (under 60) | Rs. 25,000 |
| Parents (senior citizens) | Rs. 50,000 |
| Parents (not senior citizens) | Rs. 25,000 |
| Preventive health check-up | Rs. 5,000 per policy |
Up to Rs. 2 Lakh via Section 24 (Home Loan)
- Interest on housing loan: up to Rs. 2 lakh under Section 24(B).
- Principal repayment: claimable under Section 80C.
- Standard deduction under the old regime: up to Rs. 52,000.
Deductions Available Under the New Regime
The new regime removes most exemptions, but retains:
- A standard deduction of Rs. 75,000.
- A Section 87A tax rebate that makes taxable income up to Rs. 12 lakh effectively tax-free (Rs. 12.75 lakh including the standard deduction).
- Section 80CCD(2) deductions for employer contributions to pension funds, including life insurance-backed pension plans.
Even under the new regime, salaried individuals can still benefit from employer contributions to life insurance-backed pension plans under Section 80CCD(2). And if you're looking to build long-term financial security beyond tax savings, life insurance policies — including ULIPs — offer wealth-building potential alongside market participation. Get quote!
Worked example: Rs. 15 lakh income under both regimes (FY 2025-26)
Old Regime
| Item | Amount |
|---|---|
| Annual Income | Rs. 15,00,000 |
| Section 80C | Rs. 1,50,000 |
| Section 80D | Rs. 25,000 |
| NPS Deduction | Rs. 25,000 |
| Home Loan Interest | Rs. 50,000 |
| Total Deductions | Rs. 2,50,000 |
| Taxable Income | Rs. 12,50,000 |
| Slab Tax | Rs. 1,25,000 |
| Cess (4%) | Rs. 5,000 |
| Total Tax Liability | Rs. 1,30,000 |
New Regime
| Item | Amount |
|---|---|
| Annual Income | Rs. 15,00,000 |
| Standard Deduction | Rs. 75,000 |
| Taxable Income | Rs. 14,25,000 |
| Slab Tax (5% + 10% + 15% across brackets) | Rs. 93,750 |
| Cess (4%) | Rs. 3,750 |
| Total Tax Liability | Rs. 97,500 |
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Which regime should you choose?
- For FY 2025-26, the new regime works out roughly Rs. 32,500 cheaper at a Rs. 15 lakh income level, even without any deductions.
- The old regime can still work out ahead if you have deductions well beyond Rs. 2.5 lakh — for instance, a larger home loan interest claim or higher Section 80C investments.
- You can choose either regime each year when filing your ITR, based on which deductions you actually qualify for; comparing both using an income tax calculator is the most reliable way to decide.
- Old-regime tax-saving instruments often yield lower returns than market-linked options.
- If you prefer investing in market instruments, ULIPs combine insurance protection with investment growth and tax-free maturity under specified conditions — worth considering regardless of which regime you choose.
Conclusion
Tax rules have shifted meaningfully over the past two budgets, and the new regime is now the more cost-effective option for many taxpayers at the Rs. 15 lakh income level — a reversal from just a couple of years ago. Still, the right choice depends on your individual deductions and financial goals. If you're exploring tax-saving instruments, life insurance remains a strong option regardless of regime choice: it offers financial protection for your loved ones, along with tax benefits under Section 80C and 10(10D) if you opt for the old regime.
Secure your future and save on taxes — explore life insurance plans tailored to your needs today. Get a quote.
Note- Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors.
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Frequently asked questions
Frequently asked questions
What is the applicable tax rate for an income of Rs. 15 lakh in India?
The tax rate for an income of Rs. 15 lakh in India varies between the old and new tax regimes. In the old regime, it is 30%, while in the new regime, it is 25%.
Are there different tax slabs for different age groups?
The categories include residents below 60, senior citizens (60-80), and super senior citizens (above 80). However, in the new tax regime, the income tax slab is the same for all age groups.
How does the new tax regime differ from the old tax regime for an income of Rs. 15 lakh?
The new tax regime offers lower tax rates but does not allow exemptions and deductions, whereas the old regime includes these benefits but at higher tax rates.
What is the tax liability under the old tax regime for an income of Rs. 15 lakh?
Under the old tax regime, the tax liability for an income of Rs. 15 lakh is approx. Rs. 2,73,000 after accounting for standard deductions and other applicable deductions.
What is the tax liability under the new tax regime for an income of Rs. 15 lakh?
Under the new tax regime, the tax liability for an income of Rs. 15 lakh is Rs. 1,95,000 without any deductions.
Can I switch between the old and new tax regimes?
Yes, salaried individuals can switch between the old and new tax regimes each year when filing their ITR.
What deductions are available under the old tax regime?
Key deductions include Section 80C (for investments like PPF, LIC, ELSS), Section 80D (for medical insurance premiums), Section 80E (for education loan interest), and Section 80G (for charitable donations). Additionally, deductions such as standard deduction, HRA, and LTA are also available, depending on eligibility.
What is the standard deduction available under the old tax regime?
The standard deduction available under the old tax regime is Rs. 50,000.
Are there any tax benefits on home loans for an income of Rs. 15 lakh?
Yes, under the old tax regime, you can claim deductions on home loan interest payments under Section 24(b) and principal repayments under Section 80C.
How can I reduce my tax liability on an income of Rs. 15 lakh?
You can reduce your tax liability by opting for deductions under the old tax regime, investing in tax-saving instruments, and claiming exemptions available based on your income and investments.
