LIQUETAX Editorial · Educational guide for Indian businesses and taxpayers

Tax Regime and Refund: Build a Comparison Worksheet

Compare income, eligible claims, liability and tax credits in separate columns to understand how regime choice affects a possible refund.

An old-versus-new comparison is easier to review when it separates the tax calculation from the refund calculation. Build two parallel worksheets using the same genuine income and credits. Differences should come from lawful rates, claims and relief, not from omitting inconvenient transactions from one column or entering a larger TDS figure in the preferred regime.

Choose the correct income period

For income earned from 1 April 2025 to 31 March 2026, select Assessment Year (AY) 2026-27 and apply the Income-tax Act, 1961. Income earned from 1 April 2026 belongs to Tax Year 2026-27 under the Income-tax Act, 2025. These are different periods. A return or notice about an earlier year does not move to the new Act merely because you handle it after April 2026.

Column one: facts shared by both calculations

List taxpayer type, age, residence and all income sources. Reconcile salary, property, business, gains and other receipts to original records. Keep normal-rate and special-rate income identifiable. The transaction facts do not change when a regime changes. A foreign asset, second employer or investment sale cannot be removed from one calculation simply because it complicates the comparison.

Column two: claims permitted in each regime

For each exemption or deduction, record the actual evidence, eligible amount and whether the regime permits it. Salary standard deduction is generally ₹75,000 under the new regime and ₹50,000 under the old regime for AY 2026-27, subject to applicable conditions. HRA, ordinary 80C claims and self-occupied home-loan interest need their regime restrictions checked. Record a reason where an item is excluded rather than leaving an unexplained blank.

Column three: final tax and applicable charges

Apply the correct assessment-year rates to each calculation, then consider rebate, marginal relief where applicable, surcharge and cess. Treat special-rate income according to its rules. A resident-individual rebate is not a universal exemption for every person or every kind of income. Show any applicable interest and fees separately so that a timing charge is not mistaken for a difference in the basic regime rates.

Column four: genuine credits and the refund result

Use reconciled TDS, TCS and tax payments. Credits do not become larger because one regime gives a lower liability. Compare them with the final amount due in each calculation to obtain a potential refund or balance payable. Investigate credit discrepancies with the relevant evidence and deductor. The worksheet should make clear whether a larger refund comes from lower tax or simply from more tax already paid.

Validate the choice before using the result

Confirm that the preferred option can be validly exercised for that year. Non-business and business-income cases have different election and switching requirements; Form 10-IEA is not a universal form for every salaried person. Check past choices, the filing date and relevant conditions. Retain both worksheets and explain the final selection before authorising the return rather than keeping only the more attractive refund figure.

Practical checklist

• Use one shared, reconciled income schedule for both regimes.
• Record each claimed benefit with evidence and regime eligibility.
• Separate normal-rate tax, special-rate tax and other charges.
• Reconcile tax credits independently of the desired result.
• Check election validity and retain both completed computations.

Worked example

Illustration: after complete computation, one valid option produces total liability of ₹60,000 and another ₹50,000, with genuine credits of ₹70,000 in both. The potential refunds are ₹10,000 and ₹20,000 respectively, while the liability difference is ₹10,000. If a different taxpayer has credits of only ₹45,000, both options may instead produce payment due. These assumed figures explain the worksheet and do not recommend a regime for a particular salary.

Frequently asked questions

Official references

• Income Tax Department: AY 2026-27 salary tax guidance
• Income Tax Department: salary deductions and allowances
• Income Tax Department: current return obligations and deadlines
• Income Tax Department: refund status manual

For help reviewing your documents and the correct next step, contact LIQUETAX. The scope and any professional fee should be agreed in writing after the facts are checked. This article provides general information; individual eligibility depends on the applicable law and records.