The Indian income tax system underwent significant changes with the introduction of the new tax regime alongside the existing old tax regime. For Financial Year 2025-26 (Assessment Year 2026-27), taxpayers can choose between two distinct tax structures, each with its own benefits and limitations. This calculator helps you understand both regimes and determine which one offers better tax savings based on your income and eligible deductions.
How to Use the India Tax Calculator
Calculating your income tax liability is straightforward with our comprehensive tool:
- Enter Your Annual Income: Input your total gross annual income before any deductions.
- Select Age Group: Choose your age category as it affects your basic exemption limit under the old regime.
- Choose Comparison Mode: Select whether to compare both regimes or calculate for a specific regime only.
- Add Deductions (Old Regime): If comparing or using the old regime, enter your eligible deductions and exemptions.
- Calculate: Click the calculate button to see your tax liability under both regimes with a clear recommendation.
Understanding India's Dual Tax Regime System
India currently offers taxpayers a choice between two tax regimes, each designed to cater to different financial situations and preferences. The key difference lies in the trade-off between lower tax rates and the availability of deductions and exemptions.
New Tax Regime (FY 2025-26)
The new tax regime offers lower tax rates but restricts most deductions and exemptions. It's designed to simplify tax calculations and benefit taxpayers who don't have significant investments in tax-saving instruments.
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹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% |
Old Tax Regime (FY 2025-26)
The old tax regime maintains higher tax rates but allows various deductions and exemptions. The basic exemption limit varies based on age, making it particularly beneficial for senior citizens.
Tax Slabs by Age Group
Below 60 Years
| 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% |
60-80 Years
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 - ₹5,00,000 | 5% |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Above 80 Years
| Up to ₹5,00,000 | Nil |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Key Deductions and Exemptions (Old Regime)
The old tax regime offers numerous deductions that can significantly reduce your taxable income:
Popular Deductions
- Section 80C: Up to ₹1,50,000 (PPF, ELSS, Life Insurance, etc.)
- Section 80D: Medical insurance premiums
- Section 80CCD(1B): Additional ₹50,000 for NPS
- Standard Deduction: ₹50,000 for salaried individuals
Exemptions
- HRA: House Rent Allowance exemption
- LTA: Leave Travel Allowance exemption
- Home Loan Interest: Up to ₹2,00,000 under Section 24(b)
- Other Allowances: Various professional allowances
Tax Rebates and Additional Charges
Section 87A Rebate
Both regimes offer tax rebates for lower-income taxpayers:
- New Regime: Up to ₹60,000 rebate for income up to ₹12,00,000
- Old Regime: Up to ₹12,500 rebate for income up to ₹5,00,000
Surcharge and Cess
High-income earners are subject to additional charges:
- Surcharge: 10% for income ₹50L-₹1Cr, 15% for ₹1Cr-₹2Cr, 25% for ₹2Cr-₹5Cr, 37% above ₹5Cr
- Health & Education Cess: 4% on total tax (including surcharge)
Which Regime Should You Choose?
The choice between regimes depends on your financial situation:
Choose New Regime If:
- You have minimal tax-saving investments
- You don't receive HRA or other major allowances
- You prefer simplicity in tax calculations
- Your income is in the lower to middle range
Choose Old Regime If:
- You have significant investments in Section 80C instruments
- You receive HRA, LTA, or other exempt allowances
- You have home loan interest payments
- Your total deductions exceed the tax benefit from lower rates
Important Notes
- You can switch between regimes each financial year
- The choice is irrevocable for the assessment year once filed
- Standard deduction is ₹75,000 in new regime vs ₹50,000 in old regime
- This calculator provides estimates; consult a tax professional for complex situations
- Tax laws are subject to change; always refer to the latest notifications
Frequently Asked Questions
What is the difference between old and new tax regime in India?
The new tax regime offers lower tax rates but restricts most deductions and exemptions. The old regime has higher tax rates but allows various deductions like Section 80C, HRA, LTA, etc. Taxpayers can choose the regime that offers better tax savings based on their financial situation.
Can I switch between tax regimes every year?
Yes, salaried individuals can choose their preferred tax regime each financial year. However, the choice is final for that assessment year once you file your income tax return.
What is the standard deduction in FY 2025-26?
The standard deduction for salaried individuals is ₹75,000 in the new tax regime and ₹50,000 in the old tax regime for FY 2025-26.
How is tax rebate under Section 87A calculated?
Section 87A provides tax rebate up to ₹60,000 for income up to ₹12,00,000 in new regime and up to ₹12,500 for income up to ₹5,00,000 in old regime. The rebate is the lower of calculated tax or maximum rebate amount.
Which tax regime should I choose?
Choose the new regime if you have minimal tax-saving investments and prefer simplicity. Choose the old regime if you have significant deductions like Section 80C investments, HRA, home loan interest, etc. Use our calculator to compare both regimes for your specific situation.
Disclaimer: This calculator provides estimates based on the tax slabs and rules for FY 2025-26. Actual tax liability may vary based on specific circumstances, additional income sources, and changes in tax laws. For accurate tax planning and filing, please consult a qualified tax professional or chartered accountant.