Income Tax Calculator (India)

Indian Income Tax Overview (FY 2026-27 / FY 2025-26)

Income tax in India is calculated based on slab rates, where different tax percentages are applied to different chunks of your taxable income. Resident individuals have the choice between two distinct tax structures:

1. New Tax Regime (Default): Offers lower tax rates across simplified slabs but removes standard deductions under Chapter VI-A (such as Section 80C, 80D, and HRA exemptions).
2. Old Tax Regime (Optional): Offers higher slab rates but allows tax-saving deductions under Chapter VI-A to minimize taxable income.

As per the latest Union Budget, the tax slabs and rules have been refined to offer massive relief to middle-class and salaried taxpayers under the New Tax Regime.

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How to Use the Income Tax Calculator

Evaluate your custom tax liability side-by-side:

1. Income Details: Enter your gross annual salary, business income, income from interest, and any other sources of earnings.
2. Standard Deductions: Check the standard deduction applied automatically (₹75,000 for New Regime, ₹50,000 for Old Regime).
3. Old Regime Deductions: Enter your investment amounts under Section 80C (PPF, ELSS, EPF), Section 80D (Health Insurance), Section 24b (Home Loan Interest), and HRA exemptions.
4. Compare & Optimize: Instantly view the side-by-side comparison of your net tax payable under both regimes, highlighting the best choice for your income profile.

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The Mathematics of Tax Compounding and Slabs

The calculator operates by breaking your Net Taxable Income into slab ranges. Let I_gross be your gross annual income.

Step 1: Solving for Net Taxable Income

• New Tax Regime: Net Taxable Income (New) = I_gross - ₹75,000 (Standard Deduction) - Eligible NPS u/s 80CCD(2)
• Old Tax Regime: Net Taxable Income (Old) = I_gross - ₹50,000 (Standard Deduction) - Deductions (80C + 80D + 24b + HRA)

Step 2: Applying the Progressive Slab Rates

The tax T_base is computed by calculating the tax within each income bracket. For example, under the New Tax Regime, if Net Taxable Income is N:

• If N <= 4,00,000: T_base = 0
• If 4,00,001 <= N <= 8,00,000: T_base = (N - 4,00,000) * 0.05
• If 8,00,001 <= N <= 12,00,000: T_base = 20,000 + (N - 8,00,000) * 0.10

Step 3: Applying Section 87A Rebate & Cess

• If eligible for Section 87A (e.g. N <= 12,00,000 under New Regime): Net Tax Payable = 0
• Otherwise, add 4% Health & Education Cess: Total Tax Payable = T_base * 1.04

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New Tax Regime Slabs & Rules (FY 2026-27 & FY 2025-26)

The New Tax Regime is the default option for all taxpayers. It has been made highly attractive with revised tax slabs and a higher standard deduction:

Annual Taxable Income (₹)	Tax Rate (%)	Tax Accrued at Upper Bound (₹)
Up to 4,00,000	Nil	Nil
4,00,001 – 8,00,000	5%	20,000
8,00,001 – 12,00,000	10%	40,000 (Cumulative: 60,000)
12,00,001 – 16,00,000	15%	60,000 (Cumulative: 1,20,000)
16,00,001 – 20,00,000	20%	80,000 (Cumulative: 2,00,000)
20,00,001 – 24,00,000	25%	1,00,000 (Cumulative: 3,00,000)
Above 24,00,000	30%	Varies by total income

1. Salaried Standard Deduction

Salaried individuals and pensioners receive a flat ₹75,000 Standard Deduction automatically under the New Tax Regime. This directly reduces your gross taxable salary before tax brackets are applied.

2. Section 87A Rebate & Zero-Tax Threshold

• Zero Tax up to ₹12 Lakhs: If your net taxable income (after the ₹75,000 standard deduction) does not exceed ₹12,0,000, you receive a full tax rebate under Section 87A, making your tax liability exactly ₹0.
• Salaried Zero-Tax Limit: Consequently, any salaried individual with a gross annual salary of up to ₹12,75,000 pays absolutely zero tax!
• Marginal Relief: If your taxable income is slightly above ₹12 Lakhs, Marginal Relief is automatically applied so that the net tax payable does not exceed the excess income earned above ₹12 Lakhs.

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Old Tax Regime Slabs & Rules (FY 2026-27 & FY 2025-26)

The Old Tax Regime remains optional. It is highly beneficial if you have significant investments, home loans, or pay high house rent:

Annual Taxable Income (₹)	Tax Rate (%)
Up to 2,50,000	Nil
2,50,001 – 5,00,000	5%
5,00,001 – 10,00,000	20%
Above 10,00,000	30%

1. Salaried Standard Deduction

Salaried employees can claim a ₹50,000 Standard Deduction under the Old Regime.

2. Section 87A Rebate

Under the Old Regime, a full tax rebate u/s 87A is available only if your net taxable income is ₹5,00,000 or less (maximum rebate of ₹12,500).

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Major Tax-Saving Deductions (Old Regime Only)

To make the Old Regime cheaper than the New Regime, you must utilize the following key deductions:

• Section 80C (up to ₹1.5 Lakhs): Deductions for contributions to EPF, PPF, ELSS mutual funds, National Savings Certificate (NSC), life insurance premium, and school tuition fees.
• Section 80D (up to ₹75,000): Deductions for health insurance premiums—up to ₹25,000 for self/spouse/children, and up to ₹50,000 for senior citizen parents.
• Section 24b (up to ₹2 Lakhs): Exemption on the interest paid on home loans for self-occupied properties.
• Section 10(13A) HRA Exemption: Tax exemption on house rent paid, calculated based on your basic salary, rent paid, and whether you live in a metro city.
• Section 80CCD(1B) (up to ₹50,000): Additional deduction for voluntary contributions to the National Pension Scheme (NPS).

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Prudent Checklist for Indian Taxpayers

Ensure high tax optimization and complete compliance with this strategic checklist:

• Declare Investments Early: Submit your investment declarations to your employer's HR portal in April to prevent heavy TDS deductions from your monthly salary throughout the year.
• Save Proofs Safely: Keep all your premium receipts, home loan interest certificates, and rent receipts saved digitally for 7 years in case the IT department requests physical verification.
• Maximize the 80C Limit early: Avoid investing ₹1.5 Lakhs in Section 80C options in March. Start an SIP in ELSS or compound PPF payments at the beginning of the financial year (April) to maximize interest returns.
• Review NPS benefits: Under Section 80CCD(2), employer contributions to your NPS account (up to 10% of basic salary) are fully tax-exempt under both tax regimes, making it an excellent dual-regime tax hack.
• Verify Form 26AS & AIS: Before filing your income tax return (ITR) in July, always reconcile your income details with your Annual Information Statement (AIS) and Form 26AS to prevent mismatches.

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Frequently Asked Questions (FAQs)

What is the primary difference between the Old and New tax regimes?

The Old Tax Regime allows taxpayers to claim major tax-saving exemptions and deductions (like Section 80C, 80D, HRA, and home loan interest) under higher slab tax rates. The New Tax Regime offers significantly lower tax slab rates but eliminates almost all traditional tax-saving exemptions and deductions.

Is the ₹75,000 standard deduction available under both regimes?

No. Salaried employees receive a ₹75,000 Standard Deduction under the New Tax Regime (FY 2026-27), whereas they can claim a ₹50,000 Standard Deduction under the Old Tax Regime.

What is the Section 87A rebate zero-tax limit under the New Regime?

Under the New Tax Regime, if your Net Taxable Income (after the standard deduction) does not exceed ₹12,00,000, your entire calculated tax is refunded via the Section 87A rebate, resulting in zero tax liability.

Can I switch tax regimes every year?

• Salaried Employees: Yes, you can choose and switch between the Old and New tax regimes every year at the time of filing your ITR.
• Business/Professional Income: No. Individuals with business or professional income can switch to the Old regime only once in their lifetime, after which they must continue with the default New Regime.