Tool

Income Tax Calculator

India lets you pick between two sets of tax rules each year. The new regime has lower rates but almost no deductions; the old regime charges more but lets you subtract 80C investments, health insurance, home loan interest and rent first. Picking wrong can cost tens of thousands of rupees.

Enter your gross income and whatever you can legitimately deduct, and this shows the tax under both regimes side by side for FY 2025-26, along with your effective rate. Hover the ? on any field if you're unsure what to enter. The full explanation is below — the slabs and cess are worth understanding before you commit for the year.

What You Earn

Annual Gross Income (₹) ? Your total income for the year before any tax or deductions — salary, plus interest, rent or freelance income if you have it. Form 16 calls it gross salary.

HRA Exemption (₹/yr) ? The tax-free portion of your House Rent Allowance, not the HRA you receive. It is the lowest of three legal limits — work it out on the HRA calculator, or leave 0 if you do not pay rent.

What You Can Deduct (Old Regime Only)

80C (max ₹1.5L) ? Add up EPF, PPF, ELSS funds, life insurance premiums, home loan principal and children’s tuition fees. Anything past ₹1.5 lakh gives you nothing.

80D Health Insurance (₹) ? Health insurance premiums for yourself and family — up to ₹25,000, or ₹50,000 if you or your insured parents are over 60.

80CCD(1B) NPS (max ₹50k) ? An extra ₹50,000 deduction for money you put into the National Pension System, on top of your ₹1.5 lakh 80C limit. Enter 0 if you have no NPS account.

Other deductions (₹) ? Anything else you can legitimately claim — home loan interest under Section 24(b) up to ₹2 lakh, education loan interest, donations under 80G.

Old Regime ? The older set of tax rules: higher slab rates, but you can subtract 80C, 80D, NPS and HRA before tax is worked out. Better for people with a home loan, high rent or large 80C investments.

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Tax payable

New Regime ? The default since FY 2023-24: lower slab rates and a ₹75,000 standard deduction, but almost no other deductions allowed. Income up to ₹12 lakh pays no tax here.

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Tax payable

Includes 4% health & education cess. Does not include surcharge for income above ₹50L. Standard deduction of ₹75,000 applied under new regime; ₹50,000 under old regime.

How income tax is calculated in India

India uses a slab system — you don't pay a flat rate on your entire income. Different portions of your income are taxed at different rates. You start at 0%, move into 5%, then 10% or 20%, and only the income above each threshold is taxed at the higher rate.

Think of it like this: if you earn ₹12 lakhs, you're not paying 15% on everything. You're paying 0% on the first ₹3L, 5% on the next ₹4L, 10% on the next ₹3L, and 15% on the last ₹2L (under the new regime).

The formula

Tax Payable (New Regime, FY 2025-26) Taxable Income = Gross Income − Standard Deduction (₹75,000)
Tax = Slab-wise calculation + 4% Health & Education Cess

New regime slabs: 0% up to ₹3L · 5% from ₹3L–7L · 10% from ₹7L–10L · 15% from ₹10L–12L · 20% from ₹12L–15L · 30% above ₹15L

Example: ₹12 lakh gross salary →
Taxable = ₹12L − ₹75,000 standard deduction = ₹11.25L
Tax = 0 + (4L × 5%) + (3L × 10%) + (1.25L × 15%) = ₹68,750
But rebate u/s 87A applies since taxable income ≤ ₹12L → Tax = ₹0

Old vs New — who should pick which?

The new regime is simpler and wins for most people with fewer deductions. The old regime wins when your total deductions (80C + 80D + HRA + NPS) are large enough to push your taxable income well below the new regime equivalent.

Rough rule: if you have the full ₹1.5L in 80C, ₹25K in 80D, and claim HRA, you likely save more in the old regime. If you have minimal deductions or are early in your career, the new regime is almost certainly better.

Frequently Asked Questions

Can I switch between old and new regime every year?

Yes, salaried employees can switch every financial year by informing their employer at the start of the year. Business owners with income from a profession or trade can only switch once.

Is NPS available as a deduction under the new regime?

Your employer's NPS contribution (80CCD(2), up to 14% of basic) is deductible even under the new regime. Your own voluntary NPS contribution (80CCD(1B), up to ₹50,000) is not available under the new regime.

What is the standard deduction in FY 2025-26?

₹75,000 under the new regime (increased from ₹50,000). The old regime gives ₹50,000. This is automatically applied — you don't need to declare anything.

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