Contents
Income Tax Calculator FY 2025-26 — Old vs New Regime
Compare your tax liability under both regimes instantly. Updated with Finance Act 2025 slabs and the enhanced ₹12 lakh rebate under Section 87A.
How to Use This Calculator
Enter your gross annual salary and any applicable deductions. The calculator instantly computes your income tax under both the Old and New tax regimes for FY 2025-26, so you can choose whichever saves you more.
- Enter your Gross Annual Salary (CTC minus employer PF, or your actual salary figure).
- Fill in HRA details if your employer pays House Rent Allowance.
- Enter the rent you actually pay each month and select your city type.
- Add your Section 80C, 80D, and NPS investments for the old regime deductions.
- Compare the Total Tax columns and pick the regime that gives you a lower liability.
How is Income Tax Calculated?
Income tax is calculated on your taxable income after deductions, using progressive slab rates.
Standard Deduction = ₹75,000
Taxable Income = Gross Salary − Standard Deduction
Slabs: 0–3L @ 0% | 3–7L @ 5% | 7–10L @ 10% | 10–12L @ 15% | 12–15L @ 20% | above 15L @ 30%
87A Rebate: Full rebate if taxable income ≤ ₹12,00,000 (zero tax)
Old Regime (FY 2025-26)
Standard Deduction = ₹50,000
Deductions: HRA + 80C (max 1.5L) + 80D + 80CCD(1B) (max 50K)
Taxable Income = Gross Salary − Standard Deduction − All Deductions
Slabs: 0–2.5L @ 0% | 2.5–5L @ 5% | 5–10L @ 20% | above 10L @ 30%
87A Rebate: Up to ₹12,500 if taxable income ≤ ₹5,00,000
Cess: Total Tax × 4% (Health and Education Cess)
What is Income Tax?
Income tax is a direct tax levied by the Government of India on your annual income under the Income Tax Act, 1961. For salaried individuals, the employer deducts Tax Deducted at Source (TDS) each month and deposits it with the government on your behalf. You reconcile your full liability when you file your Income Tax Return (ITR).
India currently offers two tax regimes — the Old Regime (with deductions) and the New Regime (lower slabs, fewer deductions). From FY 2023-24, the New Regime is the default, but you can opt into the Old Regime when filing your return.
Key Terms
- Gross Salary
- Total compensation from your employer before any deductions, including basic pay, HRA, special allowances, and bonuses.
- HRA (House Rent Allowance)
- An allowance paid by employers towards rental accommodation. Partly exempt under Section 10(13A) in the old regime.
- Section 80C
- Allows deductions up to ₹1,50,000 for investments in PPF, ELSS, EPF, life insurance premiums, NSC, home loan principal, etc.
- Section 87A Rebate
- A tax credit that reduces your tax liability to zero if your taxable income falls within the specified threshold (₹12L new / ₹5L old regime).
- Cess
- An additional 4% surcharge on income tax to fund health and education initiatives. Applied after the rebate.
- TDS (Tax Deducted at Source)
- Advance tax deducted by your employer monthly, equivalent to annual tax ÷ 12.
Frequently Asked Questions
Yes. The calculator is updated with Finance Act 2025 tax slabs, the new ₹75,000 standard deduction under the new regime, and the revised 87A rebate threshold of ₹12 lakh. For complex income situations involving capital gains, business income, or foreign income, we recommend verifying with a Chartered Accountant.
The new regime offers lower progressive slab rates (5%, 10%, 15%, 20%, 30%) with a standard deduction of ₹75,000 but disallows most exemptions and deductions. Crucially, if your total taxable income is ₹12 lakh or less, you pay zero tax under the new regime due to the full Section 87A rebate.
It depends on your deductions. If you have significant 80C investments, HRA exemptions, or health insurance premiums (80D), the old regime often saves more. If your deductions are minimal, the new regime’s lower slab rates typically win. This calculator shows both side-by-side so you can decide instantly.
Section 87A is a tax credit that reduces your net tax liability. Under the new regime, if your taxable income is ₹12 lakh or less, your entire tax is rebated — you pay ₹0. Under the old regime, the rebate is limited to ₹12,500 for taxable incomes up to ₹5 lakh.
Your employer estimates your annual tax liability at the start of the financial year and divides it by 12. This monthly amount is deducted from your salary and deposited with the government as TDS. Adjustments are made in the last few months if your income changes during the year.