Age Group
Income Tax in India — An Overview
Income tax is a direct tax levied by the Government of India on your annual earnings. The tax is calculated on your total taxable income for the financial year (April 1 to March 31) and is governed by the Income Tax Act, 1961. Every individual with a gross income exceeding the basic exemption limit is required to file an income tax return (ITR).
As of FY 2025-26, individual taxpayers can choose between two tax regimes — the New Tax Regime (made the default from FY 2023-24) and the Old Tax Regime. Each regime has different tax slabs and deduction rules, and the best choice depends on your income level and the deductions you are eligible for.
Tax Slabs — New vs Old Regime (FY 2025-26)
New Tax Regime
Standard deduction: ₹75,000 | Rebate u/s 87A: up to ₹60,000 (income ≤ ₹12 lakh)
| 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
Standard deduction: ₹50,000 | Rebate u/s 87A: up to ₹12,500
| Income Slab (Below 60) | 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% |
All slabs are after applying the standard deduction. A 4% Health and Education Cess is added on the final tax amount. Senior citizens (60–80 years) get a basic exemption of ₹3 lakh, and super senior citizens (80+) get ₹5 lakh under the old regime.
New Regime vs Old Regime — Which is better for you?
The New Tax Regime offers lower tax rates but does not allow most common deductions such as Section 80C, 80D, HRA, or LTA. It is beneficial for individuals who do not have many tax-saving investments or those with relatively lower incomes.
The Old Tax Regime has higher slab rates but allows a wide range of deductions. If you invest ₹1.5 lakh under Section 80C (PPF, ELSS, life insurance, etc.), claim HRA, and have a health insurance premium, the old regime may result in a lower tax outgo — particularly if your income is above ₹10 lakh.
Use the calculator above to compare your tax liability under both regimes based on your actual income and deductions. Switch the tab and enter the same income to see which one saves you more.
Key Deductions under the Old Tax Regime
| Section | Eligible Investments / Expenses | Max Deduction |
|---|---|---|
| 80C | PPF, ELSS, EPF, Life Insurance, NSC, 5-yr FD, Tuition Fees, Home Loan Principal | ₹1,50,000 |
| 80D | Health insurance premiums (self, spouse, children, parents) | ₹25,000 – ₹1,00,000 |
| 80CCD(1B) | Additional NPS contribution (over 80C limit) | ₹50,000 |
| Standard Deduction | Available to all salaried and pensioners automatically | ₹50,000 |
| HRA | House Rent Allowance — actual rent minus 10% of salary or 40/50% of salary | Actual calculation |
| Section 24(b) | Home loan interest on self-occupied property | ₹2,00,000 |
Tax worked examples — FY 2025-26 (New Tax Regime)
These step-by-step calculations show the exact tax payable for a salaried individual at four common income levels under the New Tax Regime. The ₹75,000 standard deduction is applied in each case.
₹8,00,000 gross
Entry-level salaried (IT/BPO/banking)
₹7,25,000
₹16,250
₹0 on ₹0–4L + ₹16,250 on ₹4–7.25L @ 5%
₹16,250 (full rebate, income ≤ ₹12L)
Nil
Zero tax! The 87A rebate completely eliminates tax for incomes up to ₹12 lakh (taxable) under the new regime.
₹12,75,000 gross
Mid-level salaried (the zero-tax sweet spot)
₹12,00,000
₹60,000
₹0 on ₹0–4L + ₹20,000 on ₹4–8L + ₹40,000 on ₹8–12L
₹60,000 (full rebate, taxable income = ₹12L)
Nil
₹12.75 lakh gross is the maximum salary that attracts zero income tax for salaried employees under the new regime in FY 2025-26.
₹15,00,000 gross
Senior professional / team lead
₹14,25,000
₹93,750
₹60,000 on ₹4–12L + ₹33,750 on ₹12–14.25L @ 15%
None (taxable income > ₹12L)
₹3,750 (4% of ₹93,750)
Effective tax rate ≈ 6.5% of gross income. Monthly tax outflow ≈ ₹8,125.
₹20,00,000 gross
Manager / senior engineer
₹19,25,000
₹1,85,000
₹60,000 on ₹4–12L + ₹60,000 on ₹12–16L @ 15% + ₹65,000 on ₹16–19.25L @ 20%
None
₹7,400 (4% of ₹1,85,000)
Effective tax rate ≈ 9.6% of gross income. Monthly tax outflow ≈ ₹16,033.
All figures assume standard deduction of ₹75,000 (salaried, new regime). No other deductions applied. Senior citizens and those with business income may have different outcomes.
How to legally reduce your tax bill
For taxpayers on the Old Tax Regime, these deductions can significantly reduce your taxable income. The new regime eliminates most of these but compensates with lower slab rates.
Maximise Section 80C (₹1.5 lakh)
Invest in PPF, ELSS, EPF (employee portion), NSC, ULIP, 5-year tax-saving FD, or pay life insurance premiums or children's tuition fees. The ₹1.5 lakh limit saves ₹46,800 in tax for a 30% slab taxpayer.
Add NPS via 80CCD(1B) (₹50,000 extra)
NPS gives an additional ₹50,000 deduction beyond the 80C limit under Section 80CCD(1B). For someone in the 30% slab, this alone saves ₹15,600 in tax — on top of the 80C benefit.
Health insurance — Section 80D (₹25,000–₹1 lakh)
Premium paid for self + family: ₹25,000 deduction. Add ₹25,000 more for parents under 60, or ₹50,000 for senior citizen parents. Total maximum: ₹1 lakh for families with senior parents.
Claim HRA if paying rent
HRA is one of the largest deductions for salaried employees. The exempt amount is the minimum of: actual HRA received, rent paid minus 10% of basic salary, or 50% (metro)/40% (non-metro) of basic salary.
Breakeven rule of thumb: If your total deductions under the old regime exceed roughly ₹3.75 lakh (for incomes around ₹15–20 lakh), the old regime saves more tax. If your deductions are below this threshold, the new regime usually wins. Use the calculator above to compare your exact situation.
Frequently Asked Questions
Who has to pay income tax in India?
Any individual whose gross total income exceeds the basic exemption limit (₹2.5 lakh under old regime, ₹3 lakh under new regime for those below 60) must file an income tax return. If tax is due, it must be paid before the ITR deadline.
What is Section 87A rebate?
Under the old regime, if your net taxable income is ₹5 lakh or less, you are entitled to a rebate of up to ₹12,500, effectively making your tax liability nil. Under the new regime for FY 2025-26, the rebate is up to ₹60,000 for income up to ₹12 lakh, meaning salaried individuals earning up to ₹12.75 lakh pay zero tax after the ₹75,000 standard deduction.
What is Health and Education Cess?
The government levies a 4% cess on your income tax (after rebate) to fund health and education programmes. This cess is applied uniformly under both tax regimes.
Can I switch between new and old regime every year?
Salaried individuals without business income can switch between the two regimes every financial year when filing their ITR. Those with business income can switch back to the old regime only once in a lifetime.
Is this calculator accurate for surcharge cases?
This calculator covers the most common individual tax scenarios (income up to ₹50 lakh). Surcharge applies at higher incomes (10% on income above ₹50 lakh, 15% above ₹1 crore, etc.) and is not included here. Please consult a CA for high-income scenarios.
Related Calculators
This calculator is for general information purposes only and is based on FY 2025-26 tax slabs (Budget 2025). Tax laws change frequently. For precise calculations, surcharge applicability, or professional advice, please consult a qualified Chartered Accountant or visit the official Income Tax India website at incometax.gov.in.
About Income Tax Calculator — India FY 2025-26
Enter your annual income, choose your tax regime, and optionally add deductions to see your exact income tax liability, effective tax rate, and monthly tax outflow. This tool is designed to be simple and accessible for users who need quick, reliable results.
When to use this tool
Use the income tax calculator — india fy 2025-26 when you need an accurate, immediate calculation without installing software or registering an account. It is especially useful for everyday decisions, quick comparisons, and planning where you need numbers fast.
How it works
The calculator applies standard, well-known formulas and conventions appropriate to the domain. Results are computed instantly in your browser to preserve privacy and avoid sending personal data to servers.
Limitations and tips
This tool provides informative estimates and is not a substitute for professional advice. For complex or high-stakes decisions, verify results with a qualified professional. Double-check inputs such as units, dates, and currency settings before making decisions.