Income Tax Calculator

Income tax slabs are income ranges that determine how much tax you need to pay on your taxable income. The tax rate applicable to you depends on the portion of income that falls within each slab.

India follows a progressive tax system, which means higher income levels are taxed at higher rates. However, a higher tax rate applies only to the income within that specific slab and not to your entire income.

For example, if your taxable income is ₹10 lakh under the new tax regime, a part of your income may be tax-free, the next portion may be taxed at 5%, and the remaining portion may be taxed at 10%. You do not pay 10% tax on the entire ₹10 lakh.

Taxpayers can choose between the old tax regime and the new tax regime, each with its own tax slabs and benefits. While the new tax regime offers lower tax rates with fewer deductions, the old tax regime allows you to claim various deductions and exemptions, subject to applicable conditions.

Understanding income tax slabs can help you estimate your tax liability and plan your finances more effectively.

The new tax regime follows a slab-based tax structure, where different portions of your taxable income are taxed at different rates. For FY 2025–26 (AY 2026–27), the applicable income tax slabs under the new tax regime are as follows:

The new tax regime was introduced under Section 115BAC of the Income Tax Act, 1961 to make income tax calculations simpler and easier to understand. It offers lower tax rates across different income slabs and is the default tax regime for FY 2025–26 (AY 2026–27). However, eligible taxpayers can still choose the old tax regime if it better suits their financial needs.

The main difference between the old and new tax regimes is simple. The new tax regime offers lower tax rates, but most deductions and exemptions available under the old regime cannot be claimed. For instance, benefits such as deductions under Section 80C and Section 80D, House Rent Allowance (HRA), and home loan interest on a self-occupied property are generally not available under the new tax regime.

Some of the key features of the new tax regime are:

• Lower tax rates across multiple income slabs
• Basic exemption limit of ₹4 lakh
• Standard deduction of ₹75,000 for eligible salaried individuals and pensioners
• Rebate under Section 87A of up to ₹60,000 for eligible taxpayers
• Taxable income up to ₹12 lakh can effectively become tax-free due to the available rebate, subject to applicable conditions
• Fewer deductions and exemptions compared to the old tax regime
• Simpler tax calculations with less paperwork and documentation

The new tax regime may be suitable for individuals who do not claim many deductions and prefer a simpler tax structure. However, the best choice depends on your income, eligible deductions and overall financial goals. Using an income tax calculator can help you compare your estimated tax liability under both regimes and evaluate the differences based on your situation.

Let us understand how income tax is calculated under the new tax regime with a simple example. Assume Rahul Sharma, a salaried professional, has:

• Annual salary income: ₹20,00,000
• Income from other sources: ₹50,000
• Standard deduction: ₹75,000

The taxable income would be calculated as follows:

Based on the applicable income tax slabs under the new tax regime, the tax liability would be calculated as follows:

In this example, the total tax liability is ₹2,02,800 under the new tax regime. Actual tax liability may vary depending on income sources, deductions, exemptions, rebates and applicable tax provisions.

The figures shown are for illustrative purpose only.

Consider the example of Amit, a salaried employee who opts for the old tax regime and claims eligible deductions to reduce his taxable income. Assume Amit has:

• Annual salary income: ₹20,00,000
• Income from other sources: ₹50,000
• Standard deduction: ₹50,000
• Deduction under Section 80C: ₹1,50,000
• Deduction under Section 80D: ₹25,000

The taxable income would be calculated as follows:

Based on the applicable income tax slabs under the old tax regime, the tax liability would be calculated as follows:

In this example, the total tax liability is ₹3,74,400 under the old tax regime after considering the standard deduction and eligible deductions under Sections 80C and 80D. Actual tax liability may vary depending on income sources, deductions, exemptions and applicable tax provisions.

The figures shown are for illustrative purpose only.

Under the new tax regime, eligible taxpayers can benefit from a rebate under Section 87A that can reduce their income tax liability to zero if their taxable income does not exceed ₹12 lakh, subject to applicable conditions.

Let us understand this with a simple example.

Assume Priya is a salaried employee with an annual salary of ₹12.75 lakh and opts for the new tax regime. Since salaried individuals are eligible for a standard deduction of ₹75,000, her taxable income is reduced to ₹12 lakh.

The tax on her taxable income would be calculated as follows:

In this example, the tax calculated under the applicable income tax slabs is ₹60,000. Since Priya is eligible for a rebate of up to ₹60,000 under Section 87A, her entire tax liability is offset, resulting in zero tax payable.

This benefit is available only under the new tax regime and is subject to the conditions specified under the Income Tax Act, 1961. Certain types of income, such as some capital gains, may not qualify for this rebate.

The figures shown are for illustrative purpose only.

Resident individuals aged 60 years or above but below 80 years may be eligible for a higher basic exemption limit under the old tax regime. The applicable income tax slabs for senior citizens for FY 2025–26 (AY 2026–27) are:

Resident individuals aged 80 years or above are classified as super senior citizens under the Income Tax Act, 1961. Under the old tax regime, they benefit from a higher basic exemption limit than other taxpayers.

The applicable income tax slabs for super senior citizens for FY 2025–26 (AY 2026–27) are:

These concessional slab rates are available only under the old tax regime. Taxpayers may compare the old and new tax regimes using an income tax calculator to understand which option may be more suitable based on their income and eligible deductions.

In certain situations, filing an income tax return (ITR) may be mandatory, even if your final tax liability is zero. Knowing when you need to file can help you stay compliant with tax regulations and avoid complications in the future:

• Total income exceeds the applicable basic exemption limit for the relevant financial year.
• A refund of excess Tax Deducted at Source (TDS) needs to be claimed from the Income Tax Department.
• Advance tax or self-assessment tax has been paid during the financial year.
• Capital losses need to be carried forward to future years, subject to applicable tax rules.
• Income has been earned from foreign sources or foreign assets are held during the year.
• Specified high-value financial transactions have been undertaken, such as certain investments, deposits or purchases.
• A notice has been issued by the Income Tax Department directing the filing of an income tax return.
• Income tax return documents are required as proof of income when applying for loans, visas or other financial services.
• Any other filing conditions prescribed under the Income Tax Act, 1961 are applicable to your situation.

Even if no tax is payable, filing an income tax return can still be useful. It helps create a financial record, makes it easier to claim refunds and can support future financial requirements such as loan applications or visa processing.

Filing an income tax return is not just about meeting a tax requirement. It can also help create financial records that may be useful for various administrative and financial purposes:

Helps claim tax refunds

Filing an ITR allows you to claim a refund if excess tax has been deducted from your income through Tax Deducted at Source (TDS).

Acts as proof of income

An income tax return serves as a widely accepted income document that may be required when applying for financial products and services.

Supports loan applications

Banks and financial institutions often ask for ITR documents to assess income stability and repayment capacity before approving loans.

Simplifies visa applications

Many embassies and consulates may request ITR records as part of the visa application process to verify financial standing.

Enables carry forward of certain losses

Filing your return on time can help you carry forward eligible capital losses and set them off against future gains, subject to applicable tax rules.

Helps maintain financial records

Regular ITR filing creates a documented financial history that can be useful for future financial and administrative requirements.

Encourages better tax planning

Understanding your income, deductions and tax liability each year can help you make more informed tax-planning decisions.

Helps avoid penalties and compliance issues

Filing your return within the prescribed timelines can help you stay compliant with tax regulations and avoid applicable penalties.