FinCalc

Income Tax Calculator

Compare tax under old and new regime

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Deductions (Old Regime only)

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Recommended

New Regime

Save ₹1,11,800

Old Regime Tax

₹1,11,800

Effective: 9.32%

New Regime Tax

₹0

Effective: 0.00%

Tax Comparison

Summary

Gross Income₹12,00,000
Old Regime Taxable₹9,75,000
New Regime Taxable₹11,25,000
You save₹1,11,800

with the New Regime

What is a Income Tax Calculator?

India currently operates two parallel income tax regimes — the Old Regime with higher rates but various deductions and exemptions, and the New Regime (revised in Budget 2025) with lower rates and a higher standard deduction but almost no deductions. This calculator computes your tax under both regimes and recommends which one saves you more.

The right choice depends on how much you claim in deductions. If you have a home loan, invest heavily in PPF/ELSS, and pay health insurance premiums, the Old Regime often wins. If you have few deductions, the New Regime's lower rates and higher rebate (tax-free income up to ₹12 lakh) usually come out ahead. This tool does the math so you don't have to.

When to Use This Calculator

  • Comparing tax liability under Old vs New regime for your specific income and deductions
  • Finding out which regime to choose for the current financial year
  • Planning deductions — seeing exactly how much each 80C/80D investment saves in tax
  • Estimating advance tax payments for freelancers and business owners
  • Understanding the impact of a salary hike on your tax bracket and take-home pay

Key Terms

Old Tax Regime

The traditional tax structure with rates of 5%, 20%, and 30%, but allows deductions under 80C (₹1.5L), 80D (health insurance), HRA exemption, home loan interest, and others.

New Tax Regime

Introduced in 2020 and revised in Budget 2025 with lower rates in ₹4L steps (5%, 10%, 15%, 20%, 25%, 30%) and a ₹75,000 standard deduction. Most deductions not available.

Section 87A Rebate

Tax rebate for lower-income taxpayers. Under the New Regime (FY 2025-26), income up to ₹12 lakh is effectively tax-free. Under the Old Regime, it applies up to ₹5 lakh.

Health & Education Cess

A 4% cess applied on the total tax amount (including surcharge). This funds health and education initiatives and is non-deductible.

Standard Deduction

A flat deduction from salary income — ₹75,000 under New Regime and ₹50,000 under Old Regime (FY 2025-26). No bills or proof needed.

Frequently Asked Questions

Which tax regime should I choose?+
If your total deductions (80C + 80D + HRA + home loan interest + others) exceed ₹3.75-4 lakh, the Old Regime is likely better. If your deductions are below ₹2.5-3 lakh, the New Regime wins. For incomes up to ₹12 lakh, the New Regime is almost always better due to the full rebate.
Can I switch between regimes every year?+
Salaried employees can switch between Old and New regime every year. Business/professional income taxpayers who choose Old Regime can switch to New only once (and can't switch back). The New Regime is the default — you need to actively opt for the Old Regime.
Is income up to ₹12 lakh really tax-free under the new regime?+
Yes, for FY 2025-26 (Budget 2025). Taxable income up to ₹12 lakh qualifies for a full Section 87A rebate under the New Regime, making the effective tax zero. With the ₹75,000 standard deduction, salaried individuals earning up to ₹12.75 lakh pay no tax.
What deductions are allowed under the New Regime?+
Very few: Standard deduction (₹75,000), employer's NPS contribution (80CCD(2)), and Section 80JJAA (new employment). Most popular deductions — 80C, 80D, HRA, home loan interest (24b), LTA — are NOT available under the New Regime.
How is tax calculated on income above ₹50 lakh?+
A surcharge applies: 10% for ₹50L-₹1Cr, 15% for ₹1Cr-₹2Cr, 25% for ₹2Cr-₹5Cr. Under the New Regime, the maximum surcharge is capped at 25%. The 4% cess is applied after surcharge. Marginal relief ensures you don't pay more tax than the incremental income above the threshold.