Income Tax Calculator

What is an Income Tax Calculator?

An income tax calculator is a free online tool that estimates your annual tax liability under both the Old and New tax regimes — instantly showing which regime saves you more money. Enter your salary, deductions (80C, 80D, HRA), and other income, and the calculator computes the tax payable under each regime side-by-side.

Picking the right regime can save ₹50,000-₹1.5 lakh annually for most salaried Indians. The calculator removes the guesswork: instead of comparing slab rates on a calculator app, you see exactly what each regime costs for your specific situation.

Old vs New Tax Regime: Slab Rates (FY26-27)

The two regimes have entirely different slab structures. The New Regime has lower headline rates but virtually no deductions. The Old Regime has higher rates but allows ₹2-5 lakh in deductions for typical salaried employees.

Plus 4% Health and Education cess on tax payable. For super-rich, surcharge applies: 10% (₹50L-₹1Cr), 15% (₹1Cr-₹2Cr), 25% (₹2Cr-₹5Cr) — capped at 25% under New Regime, can go up to 37% under Old Regime.

Section 87A Rebate: Tax-Free Income Threshold

Section 87A provides a rebate that effectively makes income tax-free up to a threshold:

• New Regime: Full rebate up to ₹7 lakh income (₹25,000 max rebate). So someone earning ₹7 lakh pays zero tax.
• Old Regime: Full rebate up to ₹5 lakh income (₹12,500 max rebate). After 80C/80D deductions of ₹2L, someone earning ₹7L can still hit zero tax under Old Regime too.
• Marginal relief: Above the 87A threshold, tax doesn't jump from zero to full slab — there's graded relief for income just above the threshold.

Major Deductions Available (Old Regime Only)

The Old Regime allows numerous deductions. The most-used ones for salaried employees:

Combined, a salaried first-time home buyer with health insurance can claim ₹4-5 lakh in deductions under Old Regime. Use our SIP Calculator to plan ELSS investments and PPF Calculator to plan PPF contributions.

When to Choose Old Regime

• You have a home loan with significant principal + interest (at least ₹3-4 lakh combined deduction)
• You contribute to PPF/ELSS to use the full ₹1.5L 80C limit
• You contribute to NPS for the additional ₹50K under 80CCD(1B)
• You pay health insurance premiums (yourself and parents)
• You receive HRA and live in a metro on rent
• Rule of thumb: If your total deductions exceed ₹3.75 lakh, Old Regime usually wins

When to Choose New Regime

• You have minimal deductions (no home loan, no significant 80C investments)
• You don't want the hassle of maintaining investment proofs
• Your income is below ₹7 lakh (zero tax under Section 87A rebate)
• You earn primarily from gig/freelance with limited expense deductions
• You prefer simplicity over tax savings
• Default from FY26-27: If you don't actively choose Old, you'll be in New

Tax Saving Strategies (Indian Salaried Employee)

1. Max out 80C (₹1.5 lakh): ELSS for highest returns, PPF for safety, EPF auto-fills via salary, tax-saver FD for ultra-conservative.
2. Add NPS for extra ₹50K (80CCD(1B)): Even ₹50K monthly NPS auto-debit unlocks an additional ₹15,000 in tax savings (30% slab).
3. Optimize HRA: If you live with parents, you can pay them rent (and they declare it as income). Keep proof — rent agreement, monthly bank transfers.
4. Health insurance is tax-efficient: ₹25K self + ₹50K for senior parents = ₹75K deduction. Pay annually for max benefit.
5. Home loan stack: Section 24(b) ₹2 lakh + 80EEA ₹1.5 lakh + 80C principal ₹1.5 lakh = ₹5 lakh in year-1 deductions for first-time buyers.
6. Donate via 80G: 50-100% deduction on donations to PM Cares, charitable trusts, registered NGOs.
7. Reimburse smartly: Phone, internet, fuel, books reimbursements (not allowances) are tax-free under Old Regime.

Frequently Asked Questions

Old vs New Tax Regime — which saves more?

It depends entirely on your deductions. Rule of thumb: if your total Old Regime deductions exceed ₹3.75 lakh (most home-loan + PPF + health insurance + NPS combinations), Old Regime saves more. If your deductions are under ₹2.5 lakh, New Regime usually wins. Always run both numbers through this calculator before deciding.

Can I switch between Old and New tax regimes every year?

Salaried employees can switch every year — no restrictions. Self-employed individuals (business income) can switch only once in a lifetime back to Old after picking New. Choose carefully if you're a freelancer or consultant.

Is NPS deduction allowed under New Regime?

Only the employer's NPS contribution under 80CCD(2) is allowed under New Regime — that's the 10% of basic salary (14% for central govt employees). Your own NPS contributions under 80CCD(1) and 80CCD(1B) are NOT deductible under New Regime.

Is HRA exempt under the New Tax Regime?

No. HRA exemption under Section 10(13A) is only available under the Old Regime. The New Regime taxes the full HRA as part of your salary.

What is Section 87A rebate in 2026?

Under New Regime: ₹25,000 rebate, making income up to ₹7 lakh tax-free. Under Old Regime: ₹12,500 rebate, making income up to ₹5 lakh tax-free. Above these thresholds, the rebate phases out under marginal relief rules.

Is gratuity tax-free in India?

Government employees: 100% tax-free. Private-sector employees covered under Payment of Gratuity Act: tax-free up to ₹20 lakh. Above ₹20 lakh is fully taxable. Senior employees should plan retirement timing around this exemption.

Are LTCG on equity taxed under New Regime?

Yes — long-term capital gains on equity over ₹1.25 lakh per year are taxed at 12.5% under both regimes. Short-term capital gains on equity are taxed at 20%. The regime choice doesn't affect capital gains tax.

When is the income tax filing deadline in India?

For most individuals: 31 July of the assessment year (i.e., 31 July 2027 for FY26-27 income). For those subject to audit: 31 October. For transfer pricing cases: 30 November. Late filing attracts ₹5,000 penalty (₹1,000 if income below ₹5L) under Section 234F.

Do I need to file ITR if my income is below ₹2.5 lakh?

Technically no, but filing is recommended to claim TDS refunds, build credit/loan history, and stay tax-compliant. ITR is mandatory if you have foreign assets, deposited over ₹1 crore in a bank account, spent over ₹2 lakh on foreign travel, or paid over ₹1 lakh on electricity bills.

Is bank FD interest taxed under New Regime?

Yes, FD interest is fully taxed at slab rates under both regimes. Banks deduct 10% TDS if interest exceeds ₹40,000 (₹50,000 for seniors). PPF and SGB are the only fixed-income products with tax-free interest. Use our FD Calculator to plan tax-aware FD investments.