Income Tax Calculator

In the Union Budget 2025, the finance minister amended the income tax slabs under the new tax regime. These changes will come into effect from April 1, 2025, and apply to the financial year 2025-26 (assessment year 2026-27).

Please note that the new tax regime continues to be the default option for all taxpayers unless they choose the old regime. Under the new tax regime for FY 2025-26, the income tax slabs have been completely revised. The updated slabs are as follows:

• Rs. 0 to Rs. 4 lakh: Nil tax
• Rs. 4 lakh to Rs. 8 lakh: 5% tax
• Rs. 8 lakh to Rs. 12 lakh: 10% tax
• Rs. 12 lakh to Rs. 16 lakh: 15% tax
• Rs. 16 lakh to Rs. 20 lakh: 20% tax
• Rs. 20 lakh to Rs. 24 lakh: 25% tax
• Above Rs. 24 lakh: 30% tax
  

This new structure is expected to help taxpayers save up to Rs. 1.14 lakh in taxes per year compared to the old system. Also, the basic exemption limit has been increased from Rs. 3 lakh to Rs. 4 lakh. This means no tax will be charged on income up to Rs. 4 lakh under the new tax regime.

Moreover, a major relief for middle-income earners is the increase in the tax rebate under Section 87A. Earlier, people with incomes up to Rs. 7 lakh got a rebate of Rs. 25,000, which resulted in zero tax.

Now, this rebate has been increased to Rs. 60,000. Thus, anyone earning up to Rs. 12 lakh will not have to pay any income tax under the new tax regime for FY 2025-26.

However, there are no new deductions added to this budget. The existing ones will still apply:

• A standard deduction of Rs. 75,000 from salary income and
• Employer’s contribution to NPS Tier-I account up to 14% of basic salary

Also, there is no change in the surcharge rates on high-income earners in the new tax regime for FY 2025-26.

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 as 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 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).

Features of new tax regime - FY 2025-26 (AY 2026-27)

The new tax regime has comparatively lower tax rates. However, it also comes with fewer deductions and exemptions. For more clarity, check out some of its main features:

• Default option
  The government is actively promoting the new regime and has even made it the default regime starting FY2023- 24. If you want to use the old tax regime (with deductions), you must specifically choose it.

• Higher basic exemption limit
  For FY25-26, there is no tax on income up to Rs. 4 lakh (this limit is Rs. 3 lakh for FY 24-25). An increase in the basic exemption limit means more of your income will be tax-free.

• Bigger tax rebate (Section 87A)
  For FY24-25, your income up to Rs. 7 lakh becomes tax-free after applying the rebate u/s 87A. Starting April 1, 2025, this rebate will apply to incomes up to Rs. 12 lakh. Thus, under the new regime, you are not required to pay any tax if your taxable income is Rs. 12 lakh or less (under certain conditions).

• Surcharge on high incomes
  If you earn more than Rs. 2 crore, you pay an extra 25% surcharge on your tax. This remains unchanged even after the Budget 2025.

How to calculate income tax payable under new tax regime

The new tax regime is now the default tax system for all taxpayers. It offers lower tax rates, but you cannot claim popular exemptions like HRA, LTA, or 80C investments.

However, as a salaried individual using the new regime in FY 2024–25, you can still claim these deductions:

• Standard Deduction: Rs. 75,000 (earlier it was Rs. 50,000) and
• NPS Deduction (80CCD(2)): Up to 14% of your basic salary, if your employer contributes to your NPS Tier-I account

These deductions reduce your total taxable income. For more clarity, let’s study an example:

• Let’s assume a salaried person earns Rs. 20 lakh in FY 2024–25.
• Their employer contributes Rs. 2 lakh to their NPS.
• They are eligible for a Rs. 75,000 standard deduction

Let’s see how the tax will be calculated in easy steps:

• Step 1: Calculate net taxable income

• Step 2: Apply tax slabs on net income

• Step 3: Add 4% health and education cess

What’s new in FY 2025–26?

Now, starting from April 1, 2025 (FY 2025–26), the following amendments will make the new tax regime more favourable:

• The basic exemption limit has been increased to Rs. 4 Lakh (from the earlier limit of Rs. 3 lakh).
• Section 87A rebate increased up to Rs. 60,000 (from the earlier limit of Rs. 25,000). If your net taxable income is Rs. 12 lakh or less, you will pay zero income tax after rebate.

Income tax slab rates for FY 2024-25 (AY 2025-26)

Stay informed about the latest income tax slab rates for FY 2024-25 (AY 2025-26). Below are the applicable tax rates based on age and residency status:

1. Individuals Below 60 Years (Resident or Non-Resident)
2. Senior Citizens (60–79 Years) (Resident or Non-Resident)
3. Super Senior Citizens (80+ Years) (Resident or Non-Resident)

Each category has distinct tax slabs under both the old and new regimes, allowing you to choose the most beneficial option. Review the detailed breakdown to optimize your tax planning and ensure compliance.

Tax rates for Individual (resident or non-resident) less than 60 years

Tax rates for Individual (resident or non-resident), 60 years or more but less than 80 years

Tax rates for Individual (resident or non-resident) 80 years of age or more

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.