Income Tax Calculator: Estimate, Save, and Plan Better

An income tax calculator is an online tool that helps you calculate taxes payable based on your income. According to the income slab, a portion of your net income will be paid as tax.

Income tax calculation is simple and easy with our calculator. You can calculate the total income tax liability with the help of an online income tax calculator. The calculator takes age, income, expenses, applicable tax deductions, and existing investments into account for estimating tax liability.

Managing taxes can be daunting, especially with the evolving tax rules and regulations each year. However, the Income Tax Calculator for FY 2025-26 (AY 2026-27) and FY 2024-25 (AY 2025-26) simplifies the process, making estimating your tax liability and planning easier. 

You can use the calculator to estimate your tax liability by following the below-mentioned steps:

• Select your age
• Enter your annual income. The income includes your salary, bonus, and other relevant variable components.
• Enter your investment details under Section 80C, 80CCC, 80CCD(1).
• Enter your medical insurance premium paid under Section 80D if you have a health insurance plan.
• Enter additional NPS Self Contributions up to ₹50000 under Section 80CCD(1B).
• Enter employer Contribution for NPS under Section 80CCD(2).

Once you complete these steps, you will see a summary of your annual income, investments, taxable income, and the amount of tax payable.

Note: You can enter "0" for any field that does not apply to you.

An income tax calculator can simplify tax estimates and help you account for every possible tax-saving option. You can use this online calculator anytime during the financial year to readjust your tax-saving investments and tax liabilities.

Listed below are a few benefits of an income tax calculator:

• Easy to use
• Online availability
• Simplifies tax calculation
• Helps identify deduction options
• Advance calculation of possible tax liability

The Indian Income Tax System is based on income levels under which individual taxpayers are taxed. Different tax rates apply to individuals as per their income levels.

Here are three categories under which individuals are supposed to pay tax:

• Individuals below 60 years of age
• Resident Senior Citizens who are 60 to 80 years of age
• Resident Super Senior Citizens who are more than 80 years of age

1. Income Tax Slabs & Rates for Individuals below 60 years:

2. Income Tax Slab and rates for Individuals between 60 years and 80 Years (Senior Citizens):

3. Income Tax Slabs and Rates for Individuals above 80 Years (Super Senior Citizen):

4. The New Income Tax Regime Slab Rates (FY 2025-26/ AY 2026-27):

Income Tax Deductions Available

Salaried employees get Form 16 from their employers, which details their total salary and taxes deducted. The form may be used as a reference to calculate taxes. Income generated from other sources, such as interest on deposits, investments, and rental income, must be incorporated into the tax calculation.

When using the tax calculator, keep the following rebates/deductions/exemptions available under the income tax law in mind:

• Under Section 87A, individuals with income below ₹7 Lakhs can claim a tax rebate of up to ₹25,000.
  
• Under Section 80C, you can claim a deduction of up to ₹1.5 Lakhs through investment in any tax-saver Fixed Deposit, PPF, NSC, ULIP, or ELSS on the interest income. However, under the new tax regime, no deduction is allowed under Section 80C.
• Under Section 80CCD (1B), one can claim a deduction of up to ₹50,000 for money deposited in the NPS.
• Under Section 80D, a deduction of up to ₹25,000 is available on medical insurance premium bills. It is ₹50,000 for senior citizens.
• Under Section 80G, donations made to a charitable organisation are eligible for deduction from taxable income.
• Under Section 80E, you can claim a 100% deduction for up to 8 years on the interest on an education loan.
• Under Section 80TTA/80TTB, the interest income from savings accounts is eligible for tax waivers up to ₹10,000 and up to ₹50,000 for senior citizens.
• Under Section 80GG, the income spent towards paying house rent (house rent allowance) is allowed as a deduction.

The salary income tax calculator in India involves a systematic approach. Here's a simplified breakdown:

• Determine Gross Salary: Start by calculating the total of your basic salary, allowances, bonuses, and any other taxable income components to determine your gross salary.

• Identify Exemptions: Certain components like House Rent Allowance (HRA), Leave Travel Allowance (LTA), etc, are exempt from tax. Thus, you must subtract these exemptions from the gross salary to calculate your taxable salary.

• Calculate Deductions: You can claim deductions under sections like 80C (investments in PPF, Provident Fund, life insurance), 80D (health insurance premiums), and 24b (home loan interest). These reduce your taxable income further.

• Determine Taxable Income: After applying exemptions and deductions, the remaining income is your taxable income.

• Apply Income Slabs and Tax Rates: India follows a progressive tax system. Apply the relevant tax rate to each portion of your taxable income based on the income slabs.

• Calculate Tax Liability: Sum the taxes calculated for each slab to determine your total tax liability.

• Consider Rebates and Surcharge: Check for any rebates (like Section 87A) or surcharges based on your taxable income, such as the rebate for those earning up to ₹7 lakh.

• Calculate Health and Education Cess: Add the 4% Health and Education Cess to your total tax liability.

• Final Tax Liability: The total, after considering all factors is your final income tax liability for the year.

• TDS and Advance Tax: Your employer deducts Tax Deducted at Source (TDS) monthly. If your total tax liability exceeds ₹10,000, you may need to pay Advance Tax, which will be adjusted against your final liability.

• File Income Tax Return: Ensure compliance by filing your Income Tax Return (ITR) and reporting your income, exemptions, deductions, and tax payments to the Income Tax Department.

Income Tax Calculation Example

Income from salary is the aggregate of Basic salary, HRA, Transport Allowance, Special Allowance, etc. Salary components like HRA, Rent, LTA, and Telephone bills are exempt from tax. In addition, a standard deduction of ₹50,000 is also exempt from tax. You cannot avail of these exemptions if you opt for a new tax regime.

Let us understand income tax calculation with the help of an example:

• Basic Salary: ₹1,00,000 per month
• HRA: ₹50,000 per month
• Special allowance: ₹21,000 per month
• Leave Travel Allowance: ₹20,000 per year
• Rent Paid: ₹25,000 per month

To calculate Income tax, include the below-mentioned income from all sources:

• Income from salary
• Rental income or interest paid for a home loan
• Income from your business (profession, business, or freelancing)
• Income from capital gains (Income generated from selling a house or shares)
• Income from other sources (Income generated from a fixed deposit account, savings account, or bonds)
   

Example of Tax Calculation Under New and Old Tax RegimeS

• Interest earned from Savings Account: ₹12,000
• Interest earned from Fixed Deposit: ₹8,000
• PPF: ₹50,000
• ELSS: ₹20,000
• LIC Premium: ₹9,000
• Medical Insurance: ₹12,000
• EPF Contribution: ₹1,44,000 (1,00,000 *12% *12 = 1,44,000)

Listed below are some tax exemptions that are not allowed anymore under the new tax regime:

• Leave Travel Concession (LTC) is applicable for salaried employees.
• House Rent Allowance (HRA) is applicable for salaried employees.
• Standard Deduction is applicable for employed individuals. It cannot be claimed if the taxpayer opts for section 115BAC.
• Deductions under Section 80C like life insurance premiums, amount paid towards deferred annuity plans, contributions towards EPF, PPF, superannuation, SSY, NSC, ELSS Mutual Funds, Tuition Fees, Principal Payment towards home loans, Tax Saving FDs, SCSS, Contribution to NPS Tier 2 by Central Government Employees, NPS contribution (Under Section 80CCD(1) and Section 80CCD(1B) are also not eligible for exemption.
• Deductions under Section 80D, such as any amount paid (in any mode other than cash) by an individual or HUF to any insurer for keeping health insurance in force, are not eligible for tax exemption.
• Section 80DD: Deduction in respect of maintenance, including medical treatment of a dependent who is a person with a disability.
• Section 80DDB: Expenses paid for medical treatment of specified diseases and ailments.
• Section 80E: Amount paid out of income chargeable to tax by payment of interest on loan taken from financial institution/approved charitable institution for pursuing higher education.
• Section 80EE: Interest payable on loan taken up to ₹35 Lakhs by the taxpayer from any financial institution, sanctioned during the FY 2016-17, for the acquisition of a residential house property whose value doesn’t exceed ₹50 Lakhs.
• Section 80EEA: Interest payable on a loan taken by an individual, who is not eligible to claim deductions under section 80EE, from any financial institution during the period beginning from 1st April 2019 and ending on 31st March 2020 for the acquisition of a residential house property whose stamp duty value doesn’t exceed ₹45 Lakhs.
• Section 80EEB: Interest payable on a loan taken by an individual from any financial institution during the period beginning from 1st April 2019 and ending on 31st March 2023 to purchase an electric vehicle.
• Section 80GG: Rent paid for furnished/unfurnished residential accommodation.
• Section 80G: Deduction in respect of donations to certain funds, charitable institutions, etc
• Section 80GGA: Deduction made for making certain donations for scientific research or rural development.
• Section 80GGC: Deduction in respect of contributions given by any person to political parties.
• Section 80JJA: Deduction in respect of profits and gains from the business of collecting and processing bio-degradable waste.
• Section 80TTA: Interest on deposits in savings accounts with a banking company, a post office, a cooperative society engaged in the banking business, etc.
• Section 80TTB: Interest on deposits with a banking company, a post office, a cooperative society engaged in the banking business, etc.

You can choose a tax regime from the Assessment Year 2024-25 (Financial Year 2023-24).

• If you are investing money in tax saving options, you can follow the old tax regime and claim deductions, including loss from house property in the same financial year.
• If you do not invest in tax-saving investments and want to continue investing in your preferred options, you can follow the new tax regime.

The tax-regime options seem to be only an experiment to assess the popularity of tax-saving investments. Your tax liabilities can be almost identical under both regimes if you select your slabs according to the conditions above.

For example, if you have a taxable income of ₹10 Lakhs in the FY 2023-24, your maximum tax-saving investments could be about ₹2 Lakhs, including sections 80C and 80D. Thus, your taxable income will be ₹8 Lakhs and tax liability around ₹72,500 under the old regime. However, if you do not invest under section 80C and use the new regime to estimate your tax, your liabilities will be about ₹75,000.

Without tax-saving investments and deductible allowances, your tax liability would be lower under the new tax regime. However, the old tax regime can offer lower taxes if you have invested money in tax-saving investments such as voluntary provident funds, life insurance plans, and home buying.

1. Comparison of New and Old Tax Regime Rates

When it comes to tax calculation for FY 2023-24, the New and Old Tax Regimes offer different tax slabs. The key difference between the two is that the Old Regime allows for various exemptions and deductions, such as HRA, standard deduction, and deductions under sections like 80C, 80D, and 80CCD. On the other hand, income tax calculation New Regime offers lower tax rates but eliminates most exemptions and deductions.

Here’s a breakdown of how the tax slabs differ under both regimes:

1) Income Tax Calculation Old Regime Slabs:

Under the old tax regime, taxpayers can claim exemptions and deductions, which can significantly reduce taxable income. The income tax slabs are:

• Income up to ₹2.5 lakh: Nil (No tax)
• Income from the limit of ₹2.5 lakh to ₹5 lakh: 5%
• Income from the limit of ₹5 lakh to ₹10 lakh: 20%
• Income above ₹10 lakh: 30%

Additionally, taxpayers can avail themselves of various exemptions and deductions so as to reduce their overall taxable income, such as HRA, Leave Travel Allowance (LTA), and Section 80C deductions for investments in PPF, life insurance, etc. Senior citizens and super senior citizens also benefit from higher exemption limits.

2) Income Tax Calculation New Regime Slabs:

The new tax regime offers the benefit of lower tax rates but removes exemptions and deductions like HRA and Section 80C. This regime is designed to be more straightforward but with fewer ways to reduce taxable income. The income tax slabs are:

• Income up to ₹3 lakh: Nil (No tax)
• Income from the limit of ₹3 lakh to ₹6 lakh: 5%
• Income bracket of ₹6 lakh to ₹9 lakh: 10%
• Income from ₹9 lakh to ₹11 lakh: 15%
• Income from the limit of ₹12 lakh to ₹15 lakh: 20%
• Income above ₹15 lakh: 30%

While the new tax regime has lower tax rates for higher income brackets, it offers no scope for exemptions and deductions. The taxpayer cannot claim benefits like the standard deduction, HRA, or Section 80C deductions, which may limit the overall savings for those with considerable deductions.

Surcharge and Education Cess Details

Both the Old and New Tax Regimes are subject to surcharge and education cess based on the total income of the taxpayer. These additional charges increase the overall tax liability.

a) Surcharge:

A surcharge refers to the additional tax levied on the total tax payable, which increases based on the income level. The following surcharge rates apply for FY 2025-26:

Note: A 25% and 37% surcharge on income tax is not applicable to taxable income under Sections 111A, 112A, and 115AD of the Income Tax Act, 1961. In these cases, the surcharge is capped at 15%. Additionally, marginal relief may be available in specific situations to reduce the surcharge burden.

b) Education Cess:

The Health and Education Cess accounts for an additional 4% of the total tax liability after applying the surcharge. The cess is charged to fund health and education initiatives, and it applies to both the Old and New Tax Regimes. For example, if the total tax liability is ₹50,000, an additional 4% cess (₹2,000) will be added, making the total tax payable ₹52,000.

Individuals must file income tax if their taxable income surpasses the specified exemption limit. Simply put, anyone falling within the tax slabs must fulfil the income tax filing obligation. According to the existing tax regime, individuals below 60 years of age have a taxable income exemption limit of ₹2.5 Lakhs for the FY 2023-24. Senior citizens between 60 and 80 years enjoy a higher exemption limit of ₹3 Lakhs. Super-senior citizens aged 80 years or above are completely exempt from income tax for incomes up to ₹5 Lakhs under the old income tax regime for FY 2023-24.

Filing income tax returns is not merely a legal obligation but a proactive step toward financial well-being. Many individuals perceive income tax filing as a cumbersome task, but understanding its numerous benefits can transform this process into a valuable financial planning and growth tool.

• Compliance with Legal Requirements: Filing income tax returns is a legal obligation for individuals whose income exceeds the prescribed exemption limit. Fulfilling this duty ensures compliance with tax laws, preventing potential legal issues and penalties.

• Proof of Income: The income tax return serves as an official document providing proof of your income. This document is often required for various financial transactions, such as applying for loans, obtaining visas, or making significant purchases.

• Loan Approval and Credit Score Improvement: Banks and financial institutions typically require income tax returns as part of the documentation when applying for loans, including home loans, car loans, or personal loans. Regular filing not only facilitates loan approval but can also contribute positively to your credit score.

• Claiming Tax Refunds: Filing income tax returns enables individuals to claim tax refunds in case excess taxes have been deducted during the financial year. This can result from investment-related deductions, tax exemptions, or any other eligible tax-saving instruments.

• Wealth Creation Through Investments: Tax planning is an integral part of financial planning. Filing income tax returns encourages individuals to explore various investment options that offer tax benefits, such as Equity-Linked Savings Schemes (ELSS), Public Provident Fund (PPF), and National Pension System (NPS). This, in turn, aids in wealth creation and long-term financial security.

• Access to Financial Products: Having a record of filed income tax returns enhances your financial credibility. It opens doors to a range of financial products and services, including credit cards, investment instruments, and other banking facilities, as institutions often consider income tax return documents when assessing an individual's financial standing.

• Retirement Planning: Income tax returns provide a comprehensive snapshot of your financial situation. This information is invaluable for retirement planning, helping you assess your savings, investments, and potential pension income. It aids in crafting a robust retirement strategy tailored to your financial goals.

• Peace of Mind and Financial Awareness: Regularly filing income tax returns fosters financial discipline and awareness. It offers security, knowing that your financial affairs are in order and that you are maximising your tax savings and benefits opportunities.    

Even though the new tax regime offers lower income tax slab rates, many of the deductions under the old tax regime cannot be availed under the new tax regime. Notable among these are the 80C and 80D tax deductions that can only be availed if you are opting for the old tax regime.

However, a few types of income are exempt from tax under the new tax regime. These include:

• Interest received from post office savings accounts up to ₹3,500 in an FY for a single account and up to ₹7,000 in an FY for a joint account.
• Gratuity payout obtained from the employer. Maximum up to ₹20 Lakhs during lifetime.
• Maturity proceeds of Life Insurance policy.
• Contributions made into EPS/NPS account by the employer up to ₹7.5 Lakhs in a financial year.
• Interest received on Employee Provident Fund (EPF) account balance for an annual contribution of up to ₹2.5 Lakhs.
• Interest earned and maturity amount received from Public Provident Fund (PPF), but without 80C tax deduction benefit on investments.
• Interest earned and maturity amount received from Sukanya Sammriddhi Yojana account but without 80C tax deduction benefit on investments.
• Gifts up to ₹5000 in a financial year received from an employer
• Allowances such as food coupons, travel costs, tour allowances, etc. are provided to employees to perform official duties.

The income tax calculator FY 2025-26 helps calculate tax liability per the latest income tax slab rates and tax rules.

For resident and non-resident Indians, the following information helps to calculate the actual tax liability at the end of a financial year –

• Annual income from salary or profits
  
• Income from other sources like investments, rental income, etc.
• Tax deductions and exemptions applicable
• House rent allowance and transport allowance

Tax will vary from individual to individual, based on their respective income slab. The total payable tax is calculated after subtracting the deductions and other taxes you may have already paid, such as Advance Tax and Tax Deducted at Source (TDS). This number is called the Net Income Tax Liability.

If your total taxable income in the FY 2023-24 is ₹15 Lakhs, here’s how it’ll play out without any tax-saving investments:

However, if you have the following investments or expenses, you can lower your income tax outflow under the old regime:

• Life insurance premiums
• Provident or Pension fund investments
• New Pension Scheme Tier-I subscription
• Investment in Equity Linked Savings Schemes (ELSS) from mutual funds
• Unit Linked Insurance Plan (ULIP) investments
• Child’s school/college tuition fees
• Health insurance premium payment for family
• Principal and interest repayment on home loan
• Interest payment on education loan
• Paid rent for a residential house
• Medical insurance premium or treatment expenses for a senior citizen parent

Income tax calculators in India have become invaluable tools for individuals and businesses navigating the complexities of tax systems. By providing accurate and efficient estimates, these calculators empower users to make informed financial decisions, optimise their tax liabilities, and plan for the future. As tax laws continue to evolve, leveraging technology in the form of income tax calculators is an effective way to stay informed and compliant with the latest regulations.