India's income tax has changed substantially in the last three budgets — new slabs, a default-new-regime switch, a ₹75,000 standard deduction, and a Section 87A rebate that makes income up to ₹12 lakh tax-free in FY 2025-26. This calculator applies the current rules for AY 2025-26, AY 2026-27, and AY 2027-28 across both regimes and all age tiers, so you can see exactly what you owe and which regime saves more.
Run your numbers through both regimes before locking in your tax-saving investments for the year. The difference between the two can easily be ₹50,000–₹1,50,000 for a typical mid-income salaried earner.
What is income tax?
Income tax is a direct tax on individuals, HUFs, firms, and companies levied by the Government of India under the Income Tax Act, 1961. Every person whose annual income exceeds the basic exemption limit is liable to file a return and pay tax according to the slab rates for that financial year.
India follows a financial year of April 1 to March 31. The assessment year (AY) is the year you file the return for the previous financial year — so AY 2026-27 is when you file for income earned in FY 2025-26.
How is income tax calculated?
- Compute gross total income — salary + interest + capital gains + rental + business + other income.
- Subtract deductions — 80C, 80D, 24(b), HRA, etc. for the old regime; only the ₹75,000 standard deduction (salaried) for the new regime.
- Apply slab rates on the resulting taxable income, slab by slab.
- Apply Section 87A rebate if you qualify (taxable income ≤ ₹12 lakh in new regime, ≤ ₹5 lakh in old).
- Add 4% Health & Education cess on the tax amount.
- Add surcharge if your income exceeds ₹50 lakh.
New tax regime slabs (FY 2025-26, Budget 2025)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Plus 4% Health & Education cess on the total tax. Section 87A rebate of ₹60,000 makes taxable income up to ₹12 lakh effectively tax-free. With the ₹75,000 standard deduction, a salaried person with gross income up to ₹12.75 lakh pays zero tax.
Old tax regime slabs (FY 2025-26 — unchanged)
Individuals below 60
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior citizens (60–80)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3,00,000 | 0% |
| ₹3,00,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Super senior citizens (80+)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹5,00,000 | 0% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Section 87A rebate of ₹12,500 applies to taxable income up to ₹5 lakh in the old regime. 4% Health & Education cess on tax for all age tiers.
Worked example: ₹15 lakh gross salary (salaried, FY 2025-26)
Under the new regime
| Step | Amount |
|---|---|
| Gross salary | ₹15,00,000 |
| Standard deduction | −₹75,000 |
| Taxable income | ₹14,25,000 |
| Tax on first ₹4L (0%) | ₹0 |
| Tax on ₹4–8L (5%) | ₹20,000 |
| Tax on ₹8–12L (10%) | ₹40,000 |
| Tax on ₹12–14.25L (15%) | ₹33,750 |
| Tax before cess | ₹93,750 |
| + 4% Cess | ₹3,750 |
| Total tax (new regime) | ₹97,500 |
Under the old regime (with full 80C + 80D + HRA)
| Step | Amount |
|---|---|
| Gross salary | ₹15,00,000 |
| Standard deduction | −₹50,000 |
| HRA exemption | −₹2,00,000 |
| Section 80C (PPF, ELSS, etc.) | −₹1,50,000 |
| Section 80D (medical insurance) | −₹25,000 |
| Section 80CCD(1B) NPS | −₹50,000 |
| Taxable income | ₹10,25,000 |
| Tax on first ₹2.5L (0%) | ₹0 |
| Tax on ₹2.5–5L (5%) | ₹12,500 |
| Tax on ₹5–10L (20%) | ₹1,00,000 |
| Tax on ₹10–10.25L (30%) | ₹7,500 |
| Tax before cess | ₹1,20,000 |
| + 4% Cess | ₹4,800 |
| Total tax (old regime) | ₹1,24,800 |
The new regime saves ₹27,300 in this case (₹1,24,800 − ₹97,500), despite the taxpayer claiming over ₹4 lakh of deductions. For this income level, the old regime only wins if you can claim significantly more — typically a home loan interest deduction of ₹2 lakh on top.
Income up to ₹12.75 lakh — pay zero tax (new regime)
For salaried employees under the new regime in FY 2025-26:
- Gross income: ₹12,75,000
- Standard deduction: −₹75,000
- Taxable income: ₹12,00,000
- Tax on slabs: ₹0 + ₹20,000 + ₹40,000 = ₹60,000
- Section 87A rebate: −₹60,000
- Tax payable: ₹0
This is the headline benefit of Budget 2025: a salaried individual earning up to ₹12.75 lakh pays zero income tax under the new regime. Above this threshold, marginal relief kicks in for income up to roughly ₹12.10 lakh taxable income to soften the cliff.
Surcharge on high incomes
| Total Income | Old Regime | New Regime |
|---|---|---|
| Up to ₹50 lakh | 0% | 0% |
| ₹50L – ₹1 Cr | 10% | 10% |
| ₹1 Cr – ₹2 Cr | 15% | 15% |
| ₹2 Cr – ₹5 Cr | 25% | 25% |
| Above ₹5 Cr | 37% | 25% (capped) |
Surcharge is calculated on tax before cess. The new regime's 25% cap above ₹5 crore is a major advantage for very high earners — Budget 2023 introduced this. Marginal relief applies if the surcharge would push your tax-plus- surcharge above the income threshold.
Deductions: old regime vs new regime
| Deduction | Old Regime | New Regime |
|---|---|---|
| Standard Deduction (salaried/pension) | ₹50,000 | ₹75,000 |
| Section 80C (PPF, ELSS, life insurance, EPF, etc.) | Up to ₹1,50,000 | Not allowed |
| Section 80D (medical insurance) | ₹25K self + ₹50K parents | Not allowed |
| Section 24(b) (home loan interest, self-occupied) | Up to ₹2,00,000 | Not allowed |
| Section 80CCD(1B) (NPS additional) | Up to ₹50,000 | Not allowed |
| Section 80CCD(2) (employer NPS) | Up to 10% of basic | Up to 14% of basic |
| HRA Exemption | Yes | No |
| LTA Exemption | Yes | No |
| Home loan interest (let-out) | Full | Full |
| Section 80E (education loan interest) | Yes | No |
| Section 80EEA (first-time home buyer) | ₹1,50,000 extra | No |
| Section 80G (donations) | 50%–100% | No |
| Section 80TTA / 80TTB (savings interest) | ₹10K / ₹50K | No |
Which regime should you choose?
Rough decision matrix:
- Gross income under ₹12.75 lakh + salaried. New regime — zero tax beats any old-regime calculation.
- Gross income ₹12.75L – ₹20L, modest deductions (under ₹2.5L). New regime is usually better.
- Gross income ₹15L – ₹30L, full 80C + 80D + ₹2L home loan interest + HRA. Old regime often wins — run both through the calculator.
- Gross income above ₹30 lakh with major home loan interest, HRA, and 80C. Old regime typically wins.
- Gross income above ₹5 crore. New regime wins due to the 25% surcharge cap.
- Senior citizens with mostly interest income. Old regime — Section 80TTB and basic exemption boost are valuable.
Tax-saving instruments under the old regime
| Instrument | Section | Max Limit | Typical Return | Lock-in |
|---|---|---|---|---|
| ELSS (Equity Linked Saving) | 80C | ₹1.5L | 11–13% | 3 yr |
| PPF | 80C | ₹1.5L | 7.1% | 15 yr |
| EPF (employee + employer) | 80C | ₹1.5L | 8.25% | Until retirement |
| 5-year Tax Saver FD | 80C | ₹1.5L | 6.5–7.5% | 5 yr |
| Life Insurance Premium | 80C | ₹1.5L | Variable | Policy term |
| Sukanya Samriddhi (girl child) | 80C | ₹1.5L | 8.2% | 21 yr or marriage |
| NPS Tier 1 (additional) | 80CCD(1B) | ₹50K | 9–10% (equity exposure) | Retirement |
| Medical Insurance | 80D | ₹25K + ₹50K parents | Risk cover | Annual |
| Home Loan Interest (self-occupied) | 24(b) | ₹2L | Tax saved on EMI | Loan term |
| Donations to approved charities | 80G | 50–100% of donation | Variable | — |
Important tax filing dates (FY 2025-26)
- 15 June 2025 — First advance tax installment (15% of estimated tax due).
- 15 September 2025 — Second advance tax (45% cumulative).
- 15 December 2025 — Third advance tax (75% cumulative).
- 15 March 2026 — Final advance tax (100%).
- 31 July 2026 — ITR filing deadline for individuals not subject to audit.
- 31 October 2026 — ITR filing deadline for individuals with audited accounts (business/profession).
- 31 December 2026 — Belated/revised return deadline (with penalty).
Common income tax mistakes to avoid
- Not comparing both regimes. Most taxpayers default to whichever their employer's payroll system uses. Always run both through this calculator before March.
- Missing the 31 July deadline. Late filing triggers ₹1,000–₹5,000 penalty plus 1% per month interest and disqualifies you from carrying forward business losses.
- Not claiming 80D for parents. If you pay your parents' medical insurance, you can deduct up to ₹50,000 for senior citizen parents (in addition to your own ₹25,000).
- Ignoring HRA when paying rent. HRA exemption is significant — often ₹1–3 lakh per year. Get a rent agreement and keep receipts even if your employer doesn't ask.
- Forgetting the ₹50,000 NPS top-up (80CCD(1B)). This is separate from the ₹1.5L 80C cap and saves an additional ₹15,000 in tax at the 30% slab.
- Not reconciling Form 26AS / AIS / TIS. Mismatches between your TDS records and your bank/employer filings cause notices. Check before filing.
- Mixing capital gains with slab income. Capital gains have flat rates and don't merge with your salary slabs. Many taxpayers miscalculate by including them.
- Filing under the wrong ITR form. ITR-1 is for simple salary cases up to ₹50L; ITR-2 includes capital gains; ITR-3 for business income; ITR-4 for presumptive income. Wrong form triggers a defective notice.
Income tax myths vs reality
- Myth: "Income up to ₹7 lakh is tax-free." Reality: For FY 2024-25 yes (₹25K rebate); for FY 2025-26 the threshold rises to ₹12 lakh under the new regime.
- Myth: "I don't need to file ITR if my employer deducted TDS." Reality: Filing is mandatory if your gross income exceeds the basic exemption limit, regardless of TDS. Filing also enables refunds, loan applications, and visa processing.
- Myth: "Old regime is always better because of deductions." Reality: Only if your deductions actually offset the higher slab rates. Many taxpayers underclaim deductions and end up paying more.
- Myth: "I can switch between regimes freely." Reality: Salaried can switch yearly. Business income earners have stricter rules — once they switch back to old after using new, they can only return to new once more.
- Myth: "The 30% slab applies to all my income." Reality: Only to income above the slab boundary. Your overall effective rate is much lower than the marginal slab rate.
Tips to minimize your tax liability
- Choose the regime in April, not March. Start the financial year with a clear plan so your tax-saving investments are aligned.
- Maximize the ₹50K NPS top-up if you're in the old regime — it's the highest marginal tax saving available beyond 80C.
- Restructure salary into reimbursements — fuel, telephone, books, and food coupons can reduce taxable income under the old regime.
- Maintain rent receipts and proof. HRA exemption is one of the largest available — but only with documentation.
- Time large capital gains. The ₹1.25 lakh LTCG exemption resets every financial year — book gains strategically.
- Pay advance tax to avoid 234B/C interest. If your tax liability exceeds ₹10,000 after TDS, advance tax is mandatory.
- File before 31 July to retain all carry- forward losses and avoid penalty.
Related calculators
- Home Loan EMI Calculator — quantify your Section 24(b) interest deduction.
- SIP Calculator — project your ELSS / 80C SIP returns.
- PPF Calculator — the most popular 80C instrument.
- FD Calculator — for 5-year tax-saver FDs and their after-tax yield.
- Personal Finance Planner — full retirement and goals dashboard.
- Salary Hike Calculator — see your post-hike take-home after tax.
- CAGR Calculator — measure your after-tax investment growth rate.
The bottom line
India's tax code in FY 2025-26 has shifted the default to the new regime, with a generous ₹12 lakh tax-free threshold for salaried earners — a meaningful change. Run your numbers through both regimes annually; the right answer changes as your salary, deductions, and home loan position evolve. For anything complex — capital gains, multiple income sources, international income — get a Chartered Accountant to review before you file. The official portal at incometax.gov.in is the source of truth.
Disclaimer: This calculator is for educational estimation only. Always cross-check with a Chartered Accountant or the official Income Tax Department portal before filing.