Income Tax (FY 24-25)
Old Regime Deductions
New Regime (Default)
₹0
Taxable: ₹0
Old Regime
₹0
Taxable: ₹0
Comprehensive Indian Income Tax Calculator & Regime Comparison Guide
In India, Income Tax is governed by the Income Tax Act of 1961 and administered by the Central Board of Direct Taxes (CBDT). Salaried individuals, self-employed professionals, and businesses are required to compute taxable income across five legal heads: Income from Salary, House Property, Profits and Gains of Business or Profession, Capital Gains, and Income from Other Sources.
Old Tax Regime vs. New Tax Regime Breakdown
Taxpayers in India have the option to choose between two tax computation regimes during tax filing:
1. New Tax Regime (Default Option):
Features significantly lower, concessional tax slab rates and higher tax rebate limits under Section 87A. However, it disallows major exemptions such as HRA, LTA, Section 80C (PPF, ELSS, LIC), and Section 80D (Health Insurance). Salaried taxpayers receive a ₹75,000 Standard Deduction.
2. Old Tax Regime (Exemption & Investment Heavy):
Features higher slab rates but permits taxpayers to claim extensive deductions under Chapter VI-A. Ideal for individuals paying substantial home loan interest (Section 24b), rent (HRA), PPF/EPF contributions, and medical insurance premiums.
New Tax Regime Slab Structure (FY 2025-26 / AY 2026-27)
- Up to ₹3,000,000: 0% Tax (Nil)
- ₹300,001 to ₹700,000: 5% Tax
- ₹700,001 to ₹1,000,000: 10% Tax
- ₹1,000,001 to ₹1,200,000: 15% Tax
- ₹1,200,001 to ₹1,500,000: 20% Tax
- Above ₹1,500,000: 30% Tax
Step-by-Step Income Tax Example Calculation
Scenario: A salaried employee earns ₹10,000,000 gross annual salary under the New Regime.
- Gross Salary: ₹1,000,000
- Standard Deduction: -₹75,000
- Net Taxable Income: ₹925,000
- Tax on ₹0 – ₹3L: ₹0
- Tax on ₹3L – ₹7L (5%): ₹20,000
- Tax on ₹7L – ₹9.25L (10%): ₹22,500
- Base Tax Payable: ₹42,500 + 4% Health & Education Cess (₹1,700) = ₹44,200
Key Deductions Summary (Old Regime)
- Section 80C: Deduction up to ₹150,000 for EPF, PPF, ELSS Mutual Funds, Life Insurance, NPS, and Home Loan Principal repayment.
- Section 80D: Medical insurance premiums up to ₹25,000 for self/family and up to ₹50,000 for senior citizen parents.
- Section 24(b): Home loan interest deduction up to ₹200,000 for self-occupied property.
Frequently Asked Questions (FAQs)
Is income up to ₹7.75 Lakhs effectively tax-free under the New Regime?
Yes. Under the New Tax Regime, taxable income up to ₹7 Lakhs qualifies for a full tax rebate under Section 87A. Combined with the ₹75,000 Standard Deduction, salaried individuals earning up to ₹7.75 Lakhs pay ₹0 income tax.
Can I switch between Old and New Tax Regimes every year?
Salaried taxpayers with no business/professional income can choose or switch between the Old and New Regime every financial year while filing their Income Tax Return (ITR-1 or ITR-2).
What is Health and Education Cess?
A mandatory 4% cess is levied on the total income tax amount payable under both tax regimes to fund public education and healthcare initiatives in India.