What is Income Tax?
Income tax is a tax the central government charges on the income you earn in a financial year — from salary, house property, business, capital gains and other sources such as interest.
Individuals in India can choose between two tax regimes. The new regime, which is the default, has lower slab rates but allows very few deductions. The old regime has higher rates but lets you claim deductions and exemptions such as 80C, 80D, HRA and home loan interest.
Fun fact
Under the new regime, a salaried person earning up to ₹12.75 lakh a year pays no income tax, thanks to the ₹75,000 standard deduction and the Section 87A rebate.
What is an Income Tax Calculator?
An income tax calculator works out your tax under both regimes from your income, deductions and age, so you can see which regime costs you less.
Why you should use an Income Tax Calculator?
- Choose the right regime: See your tax under the new and old regimes side by side before you decide.
- Plan your deductions: See how investments and expenses such as 80C, NPS and health insurance change your tax under the old regime.
- Avoid surprises: Know your likely tax early, so you can plan advance tax and investments through the year.
Income Tax Slabs for FY 2025-26 and FY 2026-27
New tax regime (all ages)
- 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%
Standard deduction for salaried individuals is ₹75,000. If your taxable income is up to ₹12 lakh, a rebate of up to ₹60,000 under Section 87A means you pay no tax.
Old tax regime
- Nil: Up to ₹2,50,000 (below 60), ₹3,00,000 (60 to 80) or ₹5,00,000 (above 80)
- 5%: From the exemption limit to ₹5,00,000
- 20%: ₹5,00,001 – ₹10,00,000
- 30%: Above ₹10,00,000
Standard deduction for salaried individuals is ₹50,000. If your taxable income is up to ₹5 lakh, a rebate of up to ₹12,500 means you pay no tax.
Under both regimes, a surcharge applies on income above ₹50 lakh, and a 4% health and education cess is added to the tax.
Income Tax Calculation with an Example
Consider a salaried person below 60 with no other income or deductions.
- Annual gross salary: ₹15,00,000
- Financial year: 2026-27
Under the new regime, taxable income is ₹15,00,000 − ₹75,000:
Tax on ₹14,25,000 = 20,000 + 40,000 + 33,750 = 93,750
With 4% cess, the tax is ₹97,500. Under the old regime, taxable income is ₹14,50,000 and the tax with cess is ₹2,57,400 — so the new regime saves ₹1,59,900 in this case.
Deductions under the old regime
- Section 80C: Up to ₹1,50,000 for ELSS, PPF, EPF, life insurance premiums, home loan principal and more.
- Section 80CCD(1B): Up to ₹50,000 extra for your own contribution to NPS.
- Section 80D: Health insurance premiums: up to ₹25,000 for self and family (₹50,000 if a senior citizen), plus more for parents.
- Section 80TTA / 80TTB: Savings account interest up to ₹10,000; for senior citizens, deposit interest up to ₹50,000.
- Home loan interest: Up to ₹2,00,000 a year on a self-occupied home under Section 24(b).
New section numbers from FY 2026-27
From FY 2026-27 (tax year 2026-27), the Income-tax Act, 2025 replaces the Income-tax Act, 1961 and renumbers these sections: 80C is now Section 123, 80CCD is Section 124, 80D is Section 126, 80E is Section 129 and 80G is Section 133. The deductions and their limits are unchanged.