What is the income tax calculator?

The Income Tax Calculator estimates how much income tax you'll pay in India for FY 2025-26 (Assessment Year 2026-27). It compares both regimes side-by-side - the newer 'New Regime' (default for most taxpayers since 2023-24, with lower slabs but fewer deductions) and the 'Old Regime' (higher slabs but allows deductions like 80C, HRA, home loan interest, etc.). The tool calculates exact tax including the 4% Health and Education Cess, applies the Section 87A rebate (zero tax for income up to ₹7 lakh in new regime, ₹5 lakh in old), and recommends which regime saves you more money based on your specific situation.

How to use this tool

1. Enter annual gross income — Total annual salary + any other income (interest, rental, capital gains). Include bonus, allowances - everything before deductions.
2. Select age category — Below 60, 60-80 (senior citizen), or above 80 (super senior). Older citizens have higher basic exemption limits in old regime.
3. Enter old regime deductions — 80C (PPF, LIC, ELSS up to ₹1.5L), 80D (health insurance up to ₹1L), HRA exempt, home loan interest (Section 24, up to ₹2L), NPS 80CCD(1B) up to ₹50K, donations and other 80E deductions.
4. Read the comparison — Both regimes calculated side-by-side. The 'Recommended' tag tells you which is cheaper. 'You save' shows the difference.
5. Choose your regime at tax filing — Declare your preferred regime to your employer (for TDS) and select it again when filing your ITR. Switching is allowed annually for salaried individuals.

FY 2025-26 tax slabs

New Regime (default, no deductions except standard):

• Up to ₹3 lakh: 0%
• ₹3-7 lakh: 5%
• ₹7-10 lakh: 10%
• ₹10-12 lakh: 15%
• ₹12-15 lakh: 20%
• Above ₹15 lakh: 30%
• Standard deduction: ₹75,000
• Section 87A rebate: income up to ₹7 lakh = zero tax

Old Regime (with deductions):

• Up to ₹2.5 lakh: 0% (below 60), ₹3 lakh (60-80), ₹5 lakh (above 80)
• ₹2.5-5 lakh: 5%
• ₹5-10 lakh: 20%
• Above ₹10 lakh: 30%
• Standard deduction: ₹50,000
• Section 87A: income up to ₹5 lakh = zero tax
• Plus 80C, 80D, HRA, home loan, NPS deductions available

Plus 4% Health and Education Cess on all tax amounts in both regimes.

Examples

• ₹10 lakh income, no deductions: New regime: ~₹46K. Old regime: ~₹113K. New wins by ₹67K.
• ₹15 lakh income, ₹3L deductions: New regime: ~₹1.45L. Old regime: ~₹1.61L. New still wins.
• ₹25 lakh income, ₹4.5L deductions: New regime: ~₹4.18L. Old regime: ~₹4.04L. Old wins by ~₹14K.
• Senior (65 yrs), ₹7 lakh income, no deductions: New regime: 0 (87A rebate). Old regime: 0 (87A rebate). Tie.

General rule: New regime wins below ₹15 lakh or when deductions are under ₹3 lakh. Old regime wins above ₹15 lakh with ₹4+ lakh deductions.

Tips & best practices

• Don't choose regime based on income alone - calculate both with YOUR specific deductions
• If you have home loan EMI + 80C investments + health insurance, old regime usually wins above ₹10L income
• For young professionals without big investments or home loan, new regime almost always wins
• Sec 87A rebate makes both regimes give zero tax at low incomes (up to ₹7L new, ₹5L old)
• Standard deduction is automatic - no need to claim. ₹75K in new, ₹50K in old
• Salaried can switch between regimes every year. Business owners are locked in (can switch once in lifetime)
• Don't forget Section 80CCD(1B) NPS ₹50K - it's an extra deduction beyond 80C in old regime

Limitations & notes

This calculator handles the most common scenarios but doesn't include: (1) surcharge above ₹50 lakh income, (2) special tax rates for capital gains, (3) marginal relief calculations, (4) presumptive taxation schemes for business, (5) NRI tax rates. For complex tax situations, consult a Chartered Accountant. Tax laws change annually - always verify with the latest Income Tax Department circulars at incometax.gov.in.

Frequently Asked Questions

Should I choose the new or old regime?

Calculate both with your specific income and deductions, then choose whichever results in less tax. As a rule of thumb: under ₹15L income, new regime usually wins. Above ₹15L with ₹4+ lakh deductions (home loan + 80C + 80D + HRA), old regime may win. Use this calculator to be sure.

What is the standard deduction?

A flat amount automatically deducted from salary income before tax calculation. Currently ₹75,000 in new regime (FY 2024-25 onwards) and ₹50,000 in old regime. You don't need to do anything - it's applied automatically.

What is the Section 87A rebate?

If your taxable income is below a threshold, you get a full rebate (zero tax). New regime: income up to ₹7 lakh = zero tax. Old regime: income up to ₹5 lakh = zero tax. Above the threshold, normal tax applies.

Can I claim HRA in new regime?

No - HRA exemption is only available in the old regime. The new regime allows almost no deductions (just standard deduction). That's why it has lower tax slabs to compensate.

What is 80C and how much can I save?

Section 80C allows deductions up to ₹1.5 lakh per year on specific investments: PPF, ELSS mutual funds, life insurance premium, NSC, EPF, principal of home loan, children's tuition fees. Tax saving = ₹1.5L × your slab rate. So at 20% slab, you save up to ₹30,000.

Is there a surcharge?

Yes for high incomes. Surcharge applies above ₹50 lakh: 10% on tax (income ₹50L-1cr), 15% (1-2cr), 25% (2-5cr), 37% old regime / 25% new regime (above 5cr). The new regime caps maximum surcharge at 25% which can be significant for high earners.

Can I switch regimes mid-year?

No - your declared regime applies for the full financial year for TDS purposes. But salaried employees can change at the time of filing ITR if it gives them better tax outcome. Business owners (Section 44AD / 44ADA) can switch only once in a lifetime.

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