Income Tax Calculator - New Tax Regime Calculator

An income tax calculator is a simple online tool. Using it, you can calculate how much income tax you need to pay for the Financial Year 2025–26 (Assessment Year 2026–27). The calculator:

• Is based on the new tax regime for FY 2025–26 and
• Has been incorporated with revised income tax slabs (announced in the Union Budget 2025).

This tool is completely free and easy to use. To make accurate tax calculations, all you need to do is enter your:

• Annual income
• Home loan interest
• Principal repayments

After this, the calculator instantly shows your tax liability per the latest income tax slabs. Whether you're a salaried employee, freelancer, or self-employed, you can use this calculator to estimate your income tax liability for FY 2025–26.

Benefits of using the new tax regime calculator

By using an online income tax calculator, you can avoid manual calculations and digitally estimate your income tax liability. This lets you remain compliant and pay the right taxes, which avoids future income tax notices.

For more clarity, let’s see four major reasons why you should use it:

1. Gives results based on the latest law

Usually, manual calculations are confusing and often lead to mistakes. An income tax calculator does all the math for you correctly. It applies the latest income tax slabs and rules. Thus, you get the exact tax amount you must pay.

2. Saves your time and reduces effort

Instead of spending hours on complex calculations, you can use this tool to estimate your income tax liability within seconds. It is quick and convenient. You can use it from your phone or computer at any time.

3. Easy to use

The calculator is designed in a user-friendly way. You just need to enter your income, home loan details, and other basic information. The tool will do the rest and show your tax amount instantly.

4. Lets you do smart tax planning

When you know your tax liability in advance, you can plan your finances better. For example, you can strategically choose between the old and new regimes or invest in tax-saving options (like ELSS, PPF, or NPS).
Moreover, there is no need for expert knowledge! The calculator is simple and can be used by anyone:

• Salaried employees
• Freelancers
• Business owners

How to calculate income tax of a salaried employee?

Calculating income tax is usually confusing for salaried employees. That’s because your salary includes various components like basic pay, HRA, and allowances. On top of it, you may also have deductions or investments that can reduce your taxable income.

Finding it tough? You can estimate your accurate income tax liability by following these five simple steps:

Step 1: Calculate gross income

Gross income is your total earnings before any tax deductions. It includes your:

• Basic salary
• House Rent Allowance (HRA)
• Leave Travel Allowance (LTA)
• Bonuses
• Other allowances

Please note that some parts of your salary (like HRA and LTA) can be exempt from tax if certain conditions are met. If we specifically talk about HRA, the exempt amount is the least of the following:

• Actual HRA received from your employer
• Rent paid minus 10% of your basic salary + DA
• 50% of your basic salary (if you live in a metro city)
• 40% of your basic salary (if you live in a non-metro city)

Now, subtract this exempt amount from your salary. Also, subtract the standard deduction of Rs. 75,000 (new regime) or Rs. 50,000 (old regime).

Once these deductions are done, add income from other sources (like interest from fixed deposits or rental income). The amount you get is your gross income.

Step 2: Calculate net taxable income

After knowing your gross income, now reduce it further using deductions allowed under the old tax regime. If you choose the new tax regime, most deductions are not allowed except for a few, like NPS (employer contribution) and Section 80CCD(2).

But if you are using the old tax regime, here are the major deductions you can claim:

Section 80C

You can claim deductions up to Rs. 1.5 lakh under this section. It includes:

• Public Provident Fund (PPF)
• Life insurance premiums
• ELSS mutual funds
• EPF (employee contribution)
• Principal repayment of a home loan
• Tuition fees for children

Section 80CCD

An extra Rs. 50,000 deduction is available for investments in the National Pension System (NPS). This is over and above the Rs. 1.5 lakh limit of Section 80C.

Section 80D

You can claim deductions for health insurance premiums:

• Rs. 25,000 for your family (self, spouse, children)
• Extra Rs. 25,000 for parents (if below 60 years)
• Rs. 50,000 for senior citizen parents

The maximum deduction you can claim under this section is Rs. 1,00,000.

Section 80DD

It covers medical expenses for disabled dependents. You can claim up to Rs. 1.25 lakh based on the severity of the disability.

Section 80E

It covers interest paid on an education loan. This deduction can be claimed for up to 8 years.

Now, add all these eligible deductions and subtract the total from your gross income. By doing so, you get your net taxable income.

Step 3: Apply income tax slabs

In this step, apply the correct income tax slab to your net taxable income. You can choose between the old tax regime and the new tax regime. Be aware that each has different rules and slabs:

• The old regime allows deductions (like 80C, 80D, 80E).
• The new regime has lower tax rates but fewer deductions.

You can use an income tax calculator to enter your net taxable income. It will apply the correct tax rate based on the slab you fall into. This gives you your basic tax amount.

Step 4: Calculate the tax payable

Now that you know your tax slab and base tax amount, add 4% Health and Education Cess to the amount. For example,

• Say your tax comes to Rs. 50,000.
• Now, cess would be Rs. 2,000 (4% of Rs. 50,000)
• This makes your total tax Rs. 52,000.

The income tax calculator does this automatically. You just need to check your total tax payable as shown by the tool.

Step 5: Consolidate and apply tax rebate (if eligible)

per the Income Tax Act, you are also eligible for a tax rebate under Section 87A. Let’s see how it differs under both old and new regimes:

The income tax calculator checks the eligibility for a tax rebate automatically. If you're eligible, it subtracts the rebate from your total tax and shows your final tax payable.

Income tax changes in budget 2025 - Key announcements

The Union Budget 2025 introduced several important updates to the income tax system for Financial Year 2025–26. The major highlights are as follows:

• Higher rebate under Section 87A: The income tax rebate limit has been raised to Rs. 60,000 from Rs. 25,000. As a result, individuals with income up to Rs. 12 lakh will have no tax liability under the new tax regime.
• Revised TDS limit on rent: The threshold for deduction of tax at source (TDS) on rent payments has increased from Rs. 40,000 to Rs. 50,000 per month, offering relief to both tenants and landlords.
• Increased interest deduction for senior citizens: The deduction limit on interest earned by senior citizens has been enhanced from Rs. 50,000 to Rs. 1,00,000, benefiting those relying on interest income.
• Changes to TCS on foreign remittances: The threshold under the Liberalised Remittance Scheme (LRS) has been raised to Rs. 10 lakh from Rs. 7 lakh, reducing the burden for individuals sending money abroad.
• Exemption for education loans: Tax Collected at Source (TCS) has been removed on education loans taken from specified financial institutions, supporting students pursuing higher education overseas.

These revisions collectively aim to simplify compliance, encourage savings, and offer relief to middle-income taxpayers.

Latest income tax slab and rates for FY 2025-26 (AY 2026-27)

The new tax regime offers lower tax rates but does not allow most deductions and exemptions like 80C, 80D, 80E, etc. In Budget 2023, the government made the new regime the default option from FY 2023–24 onwards. It also allowed a standard deduction of Rs. 50,000 and gave a tax rebate on income up to Rs. 7 lakh.

In the Union Budget 2025, the government made more changes. They particularly revised the tax slabs for FY 2025–26. Now, the top 30% tax rate will apply only when your income exceeds Rs. 24 lakh (compared to Rs. 15 lakh earlier).

For more clarity, let’s check out the new tax regime slabs for FY 2025–26 (AY 2026–27) in the table below:

Additionally, those earning up to Rs. 12 lakh can get a rebate of up to Rs. 60,000 under Section 87A. This can bring your final tax to zero (depending on your exact income and calculations).

Benefits of Using Income Tax Calculator

By using an online income tax calculator, you can avoid manual calculations and digitally estimate your income tax liability. This lets you remain compliant and pay the right taxes, which avoids future income tax notices.

For more clarity, let’s see four major reasons why you should use it:

1. Gives results based on the latest law

Usually, manual calculations are confusing and often lead to mistakes. An income tax calculator does all the math for you correctly. It applies the latest income tax slabs and rules. Thus, you get the exact tax amount you must pay.

2. Saves your time and reduces effort

Instead of spending hours on complex calculations, you can use this tool to estimate your income tax liability within seconds. It is quick and convenient. You can use it from your phone or computer at any time.

3. Easy to use

The calculator is designed in a user-friendly way. You just need to enter your income, home loan details, and other basic information. The tool will do the rest and show your tax amount instantly.

4. Lets you do smart tax planning

When you know your tax liability in advance, you can plan your finances better. For example, you can strategically choose between the old and new regimes or invest in tax-saving options (like ELSS, PPF, or NPS).
Moreover, there is no need for expert knowledge! The calculator is simple and can be used by anyone:

• Salaried employees
• Freelancers
• Business owners

How to calculate income tax of a salaried employee?

Calculating income tax is usually confusing for salaried employees. That’s because your salary includes various components like basic pay, HRA, and allowances. On top of it, you may also have deductions or investments that can reduce your taxable income.

Finding it tough? You can estimate your accurate income tax liability by following these five simple steps:

Step 1: Calculate gross income

Gross income is your total earnings before any tax deductions. It includes your:

• Basic salary
• House Rent Allowance (HRA)
• Leave Travel Allowance (LTA)
• Bonuses
• Other allowances

Please note that some parts of your salary (like HRA and LTA) can be exempt from tax if certain conditions are met. If we specifically talk about HRA, the exempt amount is the least of the following:

• Actual HRA received from your employer
• Rent paid minus 10% of your basic salary + DA
• 50% of your basic salary (if you live in a metro city)
• 40% of your basic salary (if you live in a non-metro city)

Now, subtract this exempt amount from your salary. Also, subtract the standard deduction of Rs. 75,000 (new regime) or Rs. 50,000 (old regime).

Once these deductions are done, add income from other sources (like interest from fixed deposits or rental income). The amount you get is your gross income.

Step 2: Calculate net taxable income

After knowing your gross income, now reduce it further using deductions allowed under the old tax regime. If you choose the new tax regime, most deductions are not allowed except for a few, like NPS (employer contribution) and Section 80CCD(2).

But if you are using the old tax regime, here are the major deductions you can claim:

Section 80C

You can claim deductions up to Rs. 1.5 lakh under this section. It includes:

• Public Provident Fund (PPF)
• Life insurance premiums
• ELSS mutual funds
• EPF (employee contribution)
• Principal repayment of a home loan
• Tuition fees for children

Section 80CCD

An extra Rs. 50,000 deduction is available for investments in the National Pension System (NPS). This is over and above the Rs. 1.5 lakh limit of Section 80C.

Section 80D

You can claim deductions for health insurance premiums:

• Rs. 25,000 for your family (self, spouse, children)
• Extra Rs. 25,000 for parents (if below 60 years)
• Rs. 50,000 for senior citizen parents

The maximum deduction you can claim under this section is Rs. 1,00,000.

Section 80DD

It covers medical expenses for disabled dependents. You can claim up to Rs. 1.25 lakh based on the severity of the disability.

Section 80E

It covers interest paid on an education loan. This deduction can be claimed for up to 8 years.

Now, add all these eligible deductions and subtract the total from your gross income. By doing so, you get your net taxable income.

Step 3: Apply income tax slabs

In this step, apply the correct income tax slab to your net taxable income. You can choose between the old tax regime and the new tax regime. Be aware that each has different rules and slabs:

• The old regime allows deductions (like 80C, 80D, 80E).
• The new regime has lower tax rates but fewer deductions.

You can use an income tax calculator to enter your net taxable income. It will apply the correct tax rate based on the slab you fall into. This gives you your basic tax amount.

Step 4: Calculate the tax payable

Now that you know your tax slab and base tax amount, add 4% Health and Education Cess to the amount. For example,

• Say your tax comes to Rs. 50,000.
• Now, cess would be Rs. 2,000 (4% of Rs. 50,000)
• This makes your total tax Rs. 52,000.

The income tax calculator does this automatically. You just need to check your total tax payable as shown by the tool.

Step 5: Consolidate and apply tax rebate (if eligible)

As per the Income Tax Act, you are also eligible for a tax rebate under Section 87A. Let’s see how it differs under both old and new regimes:

The income tax calculator checks the eligibility for a tax rebate automatically. If you're eligible, it subtracts the rebate from your total tax and shows your final tax payable.

Latest income tax slab and rates for FY 2025-26 (AY 2026-27)

The new tax regime offers lower tax rates but does not allow most deductions and exemptions like 80C, 80D, 80E, etc. In Budget 2023, the government made the new regime the default option from FY 2023–24 onwards. It also allowed a standard deduction of Rs. 50,000 and gave a tax rebate on income up to Rs. 7 lakh.

In the Union Budget 2025, the government made more changes. They particularly revised the tax slabs for FY 2025–26. Now, the top 30% tax rate will apply only when your income exceeds Rs. 24 lakh (compared to Rs. 15 lakh earlier).

For more clarity, let’s check out the new tax regime slabs for FY 2025–26 (AY 2026–27) in the table below:

Additionally, those earning up to Rs. 12 lakh can get a rebate of up to Rs. 60,000 under Section 87A. This can bring your final tax to zero (depending on your exact income and calculations).

Income tax calculation salaried employees: Understand income tax calculation under both old and new tax regimes

Understanding how income tax is calculated for salaried individuals becomes much easier when you break it down step by step. Under the new tax regime, salary structure, exemptions, deductions, and applicable tax rates together determine your final tax liability. Below is a clear explanation using a practical example, along with tables to help you visualise the calculation under both the old and new tax regimes.

What counts as income from salary

Your salary income usually includes multiple components. These commonly consist of basic salary, house rent allowance (HRA), special allowance, transport allowance, and other allowances paid by your employer. While most of these are fully taxable, certain components may be partly or fully exempt, depending on the conditions.

Some reimbursements, such as telephone bill reimbursements or leave travel allowance (LTA), may qualify for tax exemption if specific rules are met. If you receive HRA and live in a rented house, you can claim an HRA exemption based on rent paid, salary, and city of residence. The exempt portion can be worked out using an HRA calculator.

In addition, a standard deduction is available to salaried individuals. Under the old tax regime, the standard deduction is Rs. 50,000, while under the new tax regime, it is Rs. 75,000.

To understand this better, let us look at an example.

Example: Salary details of Nidhi

Nidhi earns a basic salary of Rs. 1,00,000 per month. She also receives HRA of Rs. 50,000 per month, a special allowance of Rs. 21,000 per month, and LTA of Rs. 20,000 in a year. She lives in Delhi and pays a monthly rent of Rs. 40,000.

Table 1: Salary breakup and taxable income

Additional income and deductions: Nidhi also earns interest income of Rs. 8,000 from a savings account and Rs. 12,000 from fixed deposits. She has made tax-saving investments such as PPF, ELSS, and LIC premiums, and has paid medical insurance premiums. These deductions are allowed only under the old tax regime.

Table 2: Deductions claimed under old tax regime

Table 3: Tax calculation – Old tax regime

Table 4: Tax calculation – New tax regime

This comparison clearly shows how the availability of exemptions and deductions impacts your taxable income and overall tax payable under each regime.

The data generated herein is completely and solely based on the information/ details provided by you in response to the questions specified by Bajaj Finserv Limited. These questions and the calculations thereon resulting in specific data are developed and based on certain tools and calculators that are made available to Bajaj Finserv Limited and are based on predetermined presumptions/ assumptions. Such information and the resultant data are provided only for user's convenience and information purposes.