The tax regime debate is back, and your salary for this year just got dragged in

Subscribe to enjoy similar stories.If you thought the old vs new tax regime debate was settled, think again.Just when the government seemed determined to push taxpayers toward the new regime, the newly notified Income Tax Rules, 2026 have quietly reopened the contest. By increasing limits for several exemptions, the old regime has regained relevance.And now, as a salaried individual, you are back to doing what you hoped was over: choosing.Every April, employers ask for investment declarations.

This year, that exercise carries more weight than it has in some time.For a while, the new regime looked like the clear winner — lower tax rates, fewer deductions to track, and less paperwork. It was designed to simplify compliance and gradually reduce dependence on exemptions.But the equation has shifted.Recent revisions have strengthened the old regime, narrowing the gap between the two systems.

The old regime is no longer fading away quietly. It is putting up a fight.The key lies in the revised Income Tax Rules, 2026.Several salary-linked allowances — which had become nearly irrelevant — have been significantly enhanced.

The children education allowance has increased from ₹100 per month per child to ₹3,000. The hostel allowance has moved from ₹300 to ₹9,000.

For families, these are not cosmetic revisions; they meaningfully expand the exemption base.More significantly, cities such as Bengaluru, Pune, Hyderabad and Ahmedabad have been reclassified at par with existing metros for House Rent Allowance (HRA) purposes. This increases the exemption cap from 40% to 50% of salary for individuals working in these cities — a substantial benefit for professionals paying high rents.These advantages are available only under the old regime.The