New Tax Regime vs Old Tax Regime for F&O Traders (2026): Which Saves More?
Note: This is general information, not tax advice, and tax rules change. Verify the current figures against the Income Tax Act, the relevant Finance Act and ICAI guidance, and confirm your own position with a qualified Chartered Accountant.
Why the regime choice matters less for traders than you think
The common fear is that moving to the new regime means losing all deductions. For salaried income, that fear is partly valid: 80C, HRA, and home loan interest deductions disappear under the new regime.
For trading income, the picture is different. Brokerage, STT, exchange and SEBI charges, GST on brokerage, internet, software, and advisory fees reduce your business profit, not your total income via slab deductions. They work at the profit-computation stage, before the regime choice applies. Both regimes start from your net business profit after expenses.
New regime slabs for FY 2025-26 (AY 2026-27)
Under the new regime, the slabs for FY 2025-26 are: nil up to ₹4 lakh; 5% from ₹4 lakh to ₹8 lakh; 10% from ₹8 lakh to ₹12 lakh; 15% from ₹12 lakh to ₹16 lakh; 20% from ₹16 lakh to ₹20 lakh; 25% from ₹20 lakh to ₹24 lakh; 30% above ₹24 lakh.
The Section 87A rebate under the new regime is ₹60,000, eliminating tax entirely if your total income is ₹12 lakh or below. This makes the effective nil-tax threshold ₹12 lakh, well above the old regime's ₹5 lakh.
Old regime slabs and key deductions
The old regime slabs are: nil up to ₹2.5 lakh; 5% from ₹2.5 lakh to ₹5 lakh; 20% from ₹5 lakh to ₹10 lakh; 30% above ₹10 lakh. The 87A rebate is ₹12,500, giving a nil-tax threshold of ₹5 lakh.
The old regime allows Section 80C deductions up to ₹1.5 lakh (PPF, ELSS, LIC), 80D (health insurance), HRA exemption if you rent, home loan interest under Section 24(b), and other deductions. For traders who are also salaried, the employer's standard deduction of ₹75,000 is available under both regimes.
A rough comparison: who benefits from which regime
The new regime wins if: your 80C and other personal deductions are low or absent, your total income is in the ₹12 to ₹15 lakh range where the lower slabs more than compensate for lost deductions, or you are a full-time trader with no HRA or home loan interest to claim.
The old regime wins if: you have large 80C claims (₹1.5 lakh), substantial HRA exemption, a home loan with significant interest (₹2 lakh under Section 24(b)), and your income is in the ₹20 to ₹30 lakh range where the 30% slab kicks in under both regimes anyway.
The crossover point for a trader with no salary and maxed-out 80C is roughly ₹8 to ₹10 lakh of net income: below that, the new regime wins on slab rates; above that, the old regime's deductions become more valuable. Run the actual numbers for your situation before deciding.
Traders can switch regimes each year
Salaried employees can switch regimes only at the start of the year, through their employer. Business income filers, including traders filing ITR-3, can opt in or out of the new regime each year when they file. There is no lock-in.
One exception: if you use the 44AD presumptive scheme to opt into the old regime, a subsequent switch to the new regime locks you out of 44AD for five years. Most active traders are not eligible for 44AD anyway, so this rarely applies.
How Aktai Tax handles the comparison
Aktai Tax computes your net F&O profit after expenses, adds it to any other income you enter, and runs the tax calculation under both regimes side by side. The report shows you the tax liability under each and flags which saves more before you file. Upload your broker P&L at Aktai Tax to see the comparison for your own numbers.
Frequently asked questions
Can F&O traders switch between the new and old tax regime every year?
Yes. Traders with business income (F&O or intraday) can switch between the new and old regimes each year. This differs from salaried employees, who face a more restricted switching window. You make the choice when you file ITR-3 for the relevant assessment year.
Are F&O trading expenses deductible under the new tax regime?
Yes. Business expenses like brokerage, STT, exchange charges, and software costs are deductible under both regimes because they reduce your business profit, not your taxable income via slab deductions. The regime choice does not affect them.
Is the 87A rebate available to F&O traders under the new regime?
Yes, if your total income does not exceed ₹12 lakh under the new regime. The rebate wipes out the full tax liability up to that threshold. However, STCG and LTCG income is excluded from the rebate calculation, so if you have significant capital gains, the rebate may not help you.
Which regime is better for a salaried person who also trades F&O?
It depends on your numbers: the size of your deductions under the old regime (80C, HRA, home loan interest) versus the lower slab rates and 87A rebate under the new regime. Run both calculations before filing. Most traders with modest deduction claims find the new regime better, but the break-even point shifts with income.