Income Tax Calculator India — 2025–26

New vs Old Tax Regime — Complete Guide for FY 2025–26

Since Budget 2020 introduced the new tax regime, Indian taxpayers have had to make an annual decision that can mean a difference of tens of thousands of rupees in tax liability. Budget 2023 made the new regime the default for all taxpayers, and Budget 2024 further sweetened it by raising the standard deduction from ₹50,000 to ₹75,000. Budget 2025 went even further — revising slabs and raising the Section 87A rebate threshold to ₹12 lakh of taxable income, effectively making income up to approximately ₹12.75 lakh completely tax-free under the new regime.

The old regime, meanwhile, retains its full deduction ecosystem — Section 80C, HRA, 80D, home loan interest, NPS, LTA — which can still produce a lower tax bill for taxpayers who maximise these deductions. The right answer depends entirely on your income level and how aggressively you invest in tax-saving instruments.

Use the calculator above for your exact comparison. The sections below explain every slab, deduction, and formula so you understand the numbers — not just accept them.

Income tax slabs for FY 2025–26 — new and old regime side by side

The two regimes have fundamentally different slab structures. The new regime has more brackets with lower rates at every level; the old regime has only four brackets but allows deductions that can substantially reduce taxable income.

How income tax is calculated — the complete formula

Tax calculation in India follows a specific sequence. Every element — from the standard deduction to the 4% health and education cess — compounds on the previous one. Understanding the order matters, especially when surcharge is involved.

Which regime saves more tax? — break-even deduction levels

With Budget 2025's revised slabs, the new regime is now the winner for a much wider income band. The old regime only recovers its edge when you have very large, verified deductions. The table below shows the minimum total deductions needed for the old regime to produce a lower tax bill.

Figures are approximations for a salaried individual with no other income. Use the calculator above for your precise comparison. Tax on ₹12L and below is ₹0 in the new regime due to the ₹12L Section 87A rebate threshold.

Section 80C — the ₹1.5 lakh tax-saving umbrella (old regime)

Section 80C is the most widely used tax deduction in India. It allows a combined deduction of up to ₹1,50,000 per financial year across a wide range of qualifying investments and expenses — all from your taxable income, reducing the income on which slab rates apply. It is available only under the old tax regime.

The ₹1.5L limit is cumulative across all instruments below — you cannot claim ₹1.5L from ELSS and another ₹1.5L from PPF separately. Smart taxpayers choose instruments based on their liquidity needs, risk appetite, and return expectations.

Salaried employees whose employer contributes to EPF already have most or all of their ₹1.5L limit used up — check your payslip before investing separately in 80C instruments. Employee's share of EPF + employer's matching contribution both count toward your 80C limit.

All major tax deductions under the old regime — beyond Section 80C

Section 80C is just the starting point. A taxpayer who fully exploits every available deduction can potentially shield ₹4–5 lakh of income from tax. Here is every significant deduction available under the old regime, with its limit and conditions.

HRA exemption — how to calculate and maximise it

House Rent Allowance is one of the most valuable components in a salaried employee's CTC — but only under the old regime. Many employees underestimate their HRA exemption because they don't know how the three-way minimum calculation works.

Documents required to claim HRA: rent receipts (monthly, signed by landlord), rental agreement, and your landlord's PAN if annual rent exceeds ₹1 lakh. You cannot claim HRA if you own the property you live in, or if you live in a property owned by a family member without paying actual rent via bank transfer.

Surcharge and cess — how they increase your tax bill at higher incomes

Once income crosses ₹50 lakh, your effective tax rate jumps significantly because surcharge is applied as a percentage of the basic income tax — not as a separate slab on income. This makes high-income tax planning particularly important.

Effective rates include 4% health and education cess. For incomes above ₹5 crore, the new regime cap of 25% surcharge (vs 37% in old regime) produces a significantly lower effective rate — a major reason ultra-high earners often benefit from the new regime despite forgoing deductions.

Income tax on salary — quick reference table for FY 2025–26

The table below shows approximate income tax for common salary levels under both regimes, assuming standard deduction only (no additional deductions for the new regime, and maximum 80C + 80D for old regime estimates where applicable).

How TDS works on salary — and what to do about it

Tax Deducted at Source (TDS) on salary is governed by Section 192 of the Income Tax Act. Your employer is legally required to estimate your annual tax liability at the start of each financial year and deduct it evenly from your monthly salary — depositing it with the government by the 7th of the following month.

If you have income from multiple sources — interest income, capital gains, rental income, freelance work — these are not captured by employer TDS. You may need to pay advance tax directly to the government (by September 15 and December 15 each year) to avoid interest under Sections 234B and 234C.

Frequently asked questions — income tax India FY 2025–26