New vs old regime tax for salaried with ₹8 lakh freelance receipts FY 2026-27

Updated for FY 2026-27 (AY 2027-28).

Many salaried professionals now receive part of their earnings as freelance fees and must decide between the new regime and the old regime each year. The choice turns on concrete numbers: standard deduction, available deductions, and whether the rebate under section 87A applies. Without a side-by-side calculation, the lower-tax option remains unclear.

Slab rates and rebate limits that apply this year

The new regime starts with a nil rate up to ₹4,00,000 and rises in steps to 30 percent above ₹24,00,000. A standard deduction of ₹75,000 is available on salary income. The rebate under section 87A wipes out tax when total income does not exceed ₹12,00,000.

The old regime begins at nil up to ₹2,50,000 and reaches 30 percent above ₹10,00,000. The standard deduction is ₹50,000. Section 80C, 80D and 80CCD(1B) deductions remain available, and the rebate under section 87A caps at ₹12,500 when total income stays at or below ₹5,00,000.

Combining salary and freelance receipts under each regime

Take a person whose Form 16 shows salary of ₹15,00,000 and who also receives ₹8,00,000 as freelance professional fees. The freelance receipts qualify for section 44ADA, so 50 percent is treated as income. Total income before any deduction is therefore ₹15,00,000 plus ₹4,00,000, or ₹19,00,000.

Under the new regime the taxable income after the ₹75,000 standard deduction is ₹18,25,000. Under the old regime the same ₹75,000 standard deduction applies, but further deductions can reduce the figure.

Worked tax calculation for ₹19 lakh total receipts

New regime tax before cess:

• 5 percent on ₹4,00,000 = ₹20,000
• 10 percent on ₹4,00,000 = ₹40,000
• 15 percent on ₹4,00,000 = ₹60,000
• 20 percent on ₹4,00,000 = ₹80,000
• 25 percent on ₹2,25,000 = ₹56,250
  Total tax ₹2,56,250 plus 4 percent cess gives ₹2,66,500.

Old regime with ₹1,50,000 under section 80C, ₹25,000 under section 80D and ₹50,000 under section 80CCD(1B): taxable income falls to ₹16,75,000. Tax works out to ₹3,07,500 before cess, or ₹3,19,800 after cess. The new regime therefore saves ₹53,300.

Recording the freelance income in the books of account

When the ₹8,00,000 is received, the entry separates the taxable and non-taxable portions.

The ₹4,00,000 credited to Section 44ADA income appears in the profit and loss account and flows directly into the tax computation.

Choosing the regime when deductions exceed the new-regime standard deduction

List every deduction you actually claim. If section 80C, 80D and home-loan interest together exceed ₹1,25,000, the old regime usually produces lower tax once total income crosses ₹15,00,000. When deductions stay below that threshold, the new regime rebate and higher standard deduction make it preferable.

Run the numbers twice: once with all old-regime deductions and once under the new regime with only the salary standard deduction. Keep the version that shows the smaller tax outflow.

Advance tax and ITR due dates that follow the choice

Advance tax is payable in four instalments if the final liability exceeds ₹10,000. The new regime does not change the dates: 15 June 15 percent, 15 September 45 percent, 15 December 75 percent and 15 March 100 percent. Freelance income under section 44ADA attracts the same schedule.

ITR-2 or ITR-3 must be filed by 31 July when accounts are not audited. The regime chosen in the return cannot be altered after the due date without a revised return.

Doing this in FlipAccounts

Open the Tax computation screen and select the individual profile that already holds salary and freelance ledger balances. Choose the new regime or old regime toggle; the system applies the slabs, standard deduction and section 87A rebate automatically. Export the resulting ITR pack that contains the filled schedules and the computation sheet for the chosen regime.

What to do this week

• Gather Form 16, bank statements and freelance invoices for the full year and enter the figures into your accounting software.
• Run the tax computation once under each regime and note the difference in the final payable amount.
• If advance tax remains due for the March instalment, pay it before 15 March using the correct assessment year and major head.

Frequently asked questions

Can I switch regimes every year?

Yes. The choice is made afresh in each return, provided you are not carrying forward any loss that restricts the option.

Does employer NPS contribution affect the comparison?

Section 80CCD(2) remains available in both regimes, so the deduction reduces taxable salary whichever option you pick.

What happens if freelance receipts exceed ₹75 lakh?

Section 44ADA ceases to apply and you must maintain books and get the accounts audited if turnover crosses the threshold. The tax comparison then uses normal business income rules.

Is health and education cess added after rebate?

Yes. The 4 percent cess is calculated on the tax after the rebate under section 87A has been applied.

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