Since the new tax regime became the default option, a lot of people file their return without ever comparing it against the old one -- and end up paying more tax than they need to, or less efficiently using investments they were already making anyway. The two regimes aren't just different rate tables; they trade deductions for lower slab rates, and which one wins depends entirely on your own numbers.
Two different deals, not two versions of the same thing
The old regime keeps higher tax rates at each slab but lets you reduce your taxable income first, through deductions like Section 80C investments (PPF, ELSS, life insurance premiums), 80D health insurance premiums, HRA exemption, and the standard deduction, among others. The new regime strips out most of those deductions in exchange for lower rates applied to a larger taxable base. Neither is universally cheaper -- it depends on how much you're actually claiming under the old regime's deduction list.
Why this trips people up
The comparison isn't just "which rate table is lower." Someone with no home loan, no health insurance premiums, and no 80C investments has nothing to deduct under the old regime anyway, so the new regime's lower rates are close to a straightforward win for them. Someone maxing out 80C, paying a home loan, and claiming HRA might reduce their taxable income enough under the old regime that its higher rates end up costing less in absolute tax than the new regime's lower rates on a much bigger base.
There's also a habit-forming effect worth naming honestly: if the old regime is what makes your 80C or insurance premiums "worth it" tax-wise, switching to the new regime doesn't just change your tax bill -- it removes the tax reason to keep making those specific investments, which is a separate decision from picking a regime for a single year.
It's not a one-time, irreversible choice
Salaried individuals can generally choose between the two regimes each financial year (through their employer's declaration or at filing time), so a regime decision from last year doesn't lock you in. That also means the comparison is worth redoing whenever your situation changes -- a new home loan, a jump in salary, or maxing out a deduction you weren't using before can flip which regime comes out ahead.
Run your actual numbers
Because the deductions are what make this hard to eyeball, the only reliable way to know which regime is cheaper for you is to calculate your tax liability both ways with your real income and real deduction amounts, not a rule of thumb from someone else's situation.
The Income Tax Calculator works out your liability under both the new and old regime for FY 2024-25, so you can compare the actual number instead of guessing which one is supposed to be better.