Understanding Tax Filing Options in India
In India, individuals can choose between the old and new tax regimes, each offering distinct rules and deductions. To accurately determine your tax liabilities, you can use an income tax calculator, which is a cost-effective alternative to hiring a professional tax consultant. This tool helps you understand your tax obligations and simplifies the comparison between both regimes, aiding in smarter financial decisions.
Budget 2025 Updates:
- No income tax for income up to Rs. 12 Lakhs due to a rebate applicable to the new regime, which is Rs. 60,000.
- Modified slab rates for the new regime for FY 2025-2026 (AY 2026-2027) are as follows:
| Income Tax Slabs | Tax Rate |
| Upto Rs. 4,00,000 | NIL |
| Rs. 4,00,001 – Rs. 8,00,000 | 5% |
| Rs. 8,00,001 – Rs. 12,00,000 | 10% |
| Rs. 12,00,001 – Rs. 16,00,000 | 15% |
| Rs. 16,00,001 – Rs. 20,00,000 | 20% |
| Rs. 20,00,001 – Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
What is the Income Tax Calculator?
The income tax calculator is an easy-to-use online tool that helps you calculate your tax liability based on your income details. It also provides a comparison of tax liability between the old and new tax regimes, helping you decide which is more beneficial. The tool is updated in line with the income tax changes proposed in the Union Budget 2025 to help you estimate your tax liability for better financial planning.
How to Use the Income Tax Calculator for FY 2024-25 (AY 2025-26) and FY 2025-26 (AY 2026-27)?
- Choose the financial year for which you want your taxes to be calculated.
- Select your age accordingly, as tax liability under the old regime differs based on age groups.
- Click on ‘Continue’.
- Enter your salary before deducting various exemptions such as HRA. If LTA deduction is applicable, reduce it from salary and enter the net figure. Enter particulars for exempt allowances if applicable.
- Enter other details such as interest income, rental income, interest paid on home loans for rented and self-occupied properties.
- For Income from Digital Assets, enter the net income (Sale consideration minus Cost of Acquisition).
- Click on ‘Continue’ again.
- Enter your tax-saving investments under sections 80C, 80D, 80G, 80E, and 80TTA, if applicable.
- Click on ‘Calculate’ to determine your tax liability and compare the old and new tax regimes.
How to Calculate Income Tax on Salary with Example
To calculate income tax, include income from all sources such as:
- Income from Salary
- Income from House Property
- Income from Capital Gains
- Income from Business/Profession
- Income from Other Sources
Example:
Neha receives a Basic Salary of Rs 1,00,000 per month, HRA of Rs 50,000, Special Allowance of Rs 21,000 per month, and LTA of Rs 20,000 annually. She pays a rent of Rs 40,000 and lives in Delhi.
| Nature | Amount | Exemption/Deduction | Taxable Income (Old regime) | Taxable Income (New regime) |
| Basic Salary | 12,00,000 | – | 12,00,000 | 12,00,000 |
| HRA | 6,00,000 | 3,60,000 | 2,40,000 | 6,00,000 |
| Special Allowance | 2,52,000 | – | 2,52,000 | 2,52,000 |
| LTA | 20,000 | 12,000 (bills submitted) | 8,000 | 20,000 |
| Standard Deduction | – | 50,000 | 50,000 | 75,000 |
| Gross Total Income from Salary | 16,50,000 | 19,97,000 |
Neha also has interest income from a savings account of Rs 8,000 and fixed deposit interest income of Rs 12,000. She has made investments to save income tax, including PPF investment of Rs 50,000, ELSS purchase of Rs 20,000, and LIC premium of Rs 8,000. Medical insurance paid is Rs 12,000.
Deductions Neha can claim under the old tax regime:
| Nature | Maximum Deduction | Eligible investments/expenses | Amount claimed by Neha |
| Section 80C | Rs.1,50,000 | PPF deposit Rs 50,000, ELSS investment Rs 20,000, LIC premium Rs 8,000, EPF deducted by employer (Neha’s contribution) = Rs 1,00,000 *12% *12 = 1,44,000 | Rs 1,50,000 |
| Section 80D | Rs 25,000 for self, Rs 50,000 for parents | Medical insurance premium Rs 12,000 | Rs 12,000 |
| Section 80TTA | Rs.10,000 | Savings account interest 8,000 | Rs. 8,000 |
Calculation of gross taxable income and tax liability in India (Old regime):
| Nature | Amount | Total |
| Income from Salary | 16,50,000 | |
| Less: Std Deduction | 50,000 | |
| Income from Other Sources | 20,000 | |
| Gross Total Income | 16,70,000 | |
| Deductions | ||
| 80C | 1,50,000 | |
| 80D | 12,000 | |
| 80TTA | 8,000 | 1,70,000 |
| Gross Taxable Income | 15,00,000 | |
| Total tax on above (including cess) | 2,73,000 |
Calculation of gross taxable income and tax liability in India (New regime):
| Nature | Amount | Total |
| Income from Salary | 19,97,000 | |
| Less: Std Deduction | 75,000 | |
| Income from Other Sources | 20,000 | |
| Gross Total Income | 19,42,000 | |
| Total tax on above (including cess) | 2,83,504 |
Illustration for Tax Calculation for Slab Rates updated as on the Budget 2025:
Mr. A has a salary income of Rs. 10,75,000 for FY 2025-2026. Income from other sources is Rs. 2,00,000. The income tax calculation for Mr. A for the FY 2025-2026 under the new regime is as follows:
| Particulars | Amount |
| Salary | 10,75,000 |
| Less – Standard deduction | (75,000) |
| Gross total Income | 10,00,000 |
| Income from Other Sources | 2,00,000 |
| Gross total Income | 12,00,000 |
| Income tax | 60,000 |
| Less – Rebate | (60,000) |
| Tax Payable | 0 |
Note: Marginal relief on rebate is still available for the slab rates proposed in Budget 2025. This rebate of Rs. 60,000 is not applicable for income taxed under special rates.
Slab Rates Under New and Old Regime
The slab rates differ under the new and old regimes. Under the old regime, the rates vary based on age: individuals under 60, those between 60 and 80, and those over 80. Under the new regime, the tax slabs are the same for all age groups.
Old Regime Slabs:
| Slabs (Rs.) | Individuals (Age < 60 years) | Resident Senior Citizens (>60 but <80 years) | Resident Super Senior Citizens (80 years and above) |
| Upto 2,50,000 | Nil | Nil | Nil |
| 2,50,001 – 3,00,000 | 5% | Nil | Nil |
| 3,00,001 – 5,00,000 | 5% | 5% | Nil |
| 5,00,000 – 10,00,000 | 20% | 20% | 20% |
| Above 10,00,000 | 30% | 30% | 30% |
New Regime Slabs:
| Tax Slab for FY 2024-25 | Tax Rate |
| Upto 3,00,000 | Nil |
| 3,00,001 – 7,00,000 |