Income Tax Calculator India 2025 – Old vs New Regime, Slabs, Deductions & Examples

Estimate your taxes instantly with the 2025 income tax calculator. Learn old vs new regime slabs, latest deductions, rebates, and examples to find which option saves you more. Stay updated with the latest rules and filing tips.

Introduction

Every year, taxpayers in India face the same question: how much income tax will I need to pay? The answer depends not only on your salary but also on deductions, exemptions, and whether you choose the old tax regime or the new one. With the latest updates in the Union Budget and Finance Act 2025, understanding your tax liability has become even more important.

An income tax calculator helps you estimate your exact liability in minutes. Whether you are a salaried employee, self-employed professional, or investor with multiple income sources, the calculator can show you how much tax applies under both regimes and which option may save you more. This article will guide you through the latest rules, explain the difference between regimes, and show step-by-step how to calculate your tax for FY 2024–25 (AY 2025–26) and FY 2025–26 (AY 2026–27).

Basics: Key Terms & How Indian Income Tax Works

Before using a calculator, it is useful to understand the building blocks of the Indian tax system. These terms appear frequently and shape your final liability.

Financial Year (FY) vs Assessment Year (AY)

• Financial Year (FY): The 12-month period in which you earn income, running from April 1 to March 31. For example, FY 2024–25 means income earned between April 1, 2024, and March 31, 2025.
• Assessment Year (AY): The year immediately after the financial year, in which you file your return. For income earned in FY 2024–25, the assessment year is AY 2025–26.

Taxpayer Categories

Tax slabs differ slightly depending on your age:

• Individuals below 60 years
• Senior citizens (60–79 years)
• Super senior citizens (80 years and above)

For non-resident Indians (NRIs), only the standard slab applies—no special age-based slabs.

What Are Tax Slabs?

India follows a progressive taxation system, where different parts of your income are taxed at different rates. For example, the first portion of income may be tax-free, the next portion taxed at 5%, then 10%, and so on. This ensures that higher incomes contribute more in proportion to earnings.

Cess and Surcharge

• Health and Education Cess: A flat 4% applied on the total tax payable, after all slab calculations.
• Surcharge: An extra charge on high-income taxpayers. Rates vary depending on total income levels. Marginal relief may apply to prevent unfair jumps in liability.

Regime Choice: Old vs New

Since FY 2020–21, individuals can choose between two systems:

• Old Regime – keeps traditional deductions and exemptions (like HRA, 80C, 80D) but has higher tax slabs.
• New Regime – offers lower tax rates but removes most exemptions and deductions.

Your choice affects both how much you pay and which benefits you can claim.

Recent Policy Updates (Finance Act 2025)

The most recent Union Budget introduced several changes that directly impact taxpayers. Staying updated is crucial if you want accurate calculations.

Updated Rebate Under Section 87A

From FY 2025–26 onwards, individuals opting for the new tax regime and having total income up to ₹12 lakh can claim a rebate of up to ₹60,000 under Section 87A. This effectively means no tax liability up to ₹12 lakh in many cases, depending on the income mix. However, this rebate is not available for capital gains income such as sale of property or shares.

Revised Slabs in the New Tax Regime (FY 2025–26)

The new regime slabs have been slightly expanded to offer relief to middle-income earners. The structure looks like this:

You can confirm these updated slabs directly from the official Income Tax portal.

Deductions and Exemptions

• In the new regime, most common deductions like HRA, 80C investments, and 80D health insurance are not available.
• In the old regime, you can still claim these, making it beneficial for taxpayers with significant investments or expenses.

For clarity on what you can still claim, resources like ClearTax provide a quick comparison of benefits.

Old Tax Regime vs New Tax Regime

Choosing between the two regimes is the most important decision before filing your return. Both have advantages, but the right option depends on your income level, deductions, and personal financial planning.

Features of the Old Regime

The old regime continues to follow the traditional slab system with higher tax rates. However, it allows taxpayers to reduce their taxable income by claiming various exemptions and deductions. Some of the popular ones include:

• House Rent Allowance (HRA)
• Leave Travel Allowance (LTA)
• Standard Deduction (₹50,000 for salaried and pensioners)
• Section 80C investments (up to ₹1.5 lakh in PF, ELSS, life insurance, etc.)
• Section 80D (medical insurance premiums)
• Section 24(b) (home loan interest on self-occupied property, up to ₹2 lakh per year)

For taxpayers who actively invest in tax-saving instruments or pay significant insurance premiums, the old regime often results in lower overall liability.

Features of the New Regime

The new regime offers lower tax rates across different income slabs but removes most deductions and exemptions. It is designed for individuals who either do not have many eligible investments or prefer a simplified system without tracking multiple claims.

The new regime also allows a standard deduction of ₹75,000 (increased in Budget 2025) for salaried employees and pensioners, providing some relief despite the removal of other benefits.

Side-by-Side Comparison

Here’s a simplified comparison to illustrate the differences between the two regimes for FY 2025–26:

Which Regime Saves More?

• High income, low deductions: The new regime is usually better, especially for individuals without major investments or housing loans.
• Moderate income, high deductions: The old regime often results in lower liability if you fully utilise 80C, 80D, and housing loan interest benefits.
• Salaried with basic deductions only: Many salaried taxpayers find the new regime more beneficial after the enhanced standard deduction.

A calculator helps you test both scenarios. The official income tax calculator allows you to compare side by side.

Components of Taxable Income

When calculating income tax, your liability is not based only on your salary. Different heads of income combine to form your Gross Total Income. Understanding these categories ensures nothing is missed while estimating tax.

Income from Salary

This includes basic pay, dearness allowance (DA), house rent allowance (HRA), special allowances, perquisites, and bonuses. Deductions like professional tax are also adjusted here.

Income from House Property

• If you own property and earn rental income, it falls under this head.
• Even if property is vacant but considered “deemed let out,” notional rent may apply.
• Interest paid on a housing loan can be claimed as a deduction (up to ₹2 lakh under old regime).

Profits and Gains from Business or Profession

This covers self-employed professionals, freelancers, and business owners. After deducting business expenses, the net profit becomes taxable income.

Capital Gains

Profits earned from selling assets like property, shares, or mutual funds fall under capital gains. These are further divided into short-term and long-term, each taxed at different rates. Importantly, rebates such as Section 87A may not apply to certain capital gains.

Income from Other Sources

This includes interest from savings accounts, fixed deposits, recurring deposits, dividends, and winnings from lotteries or games.

Why Knowing Components Matters

Each head of income is taxed differently. For example, salary income follows slab rates, but long-term capital gains may be taxed at 10% or 20% depending on conditions. By entering the right details into an income tax calculator, you avoid underestimating liability and prevent surprises during filing.

For clarity, the RBI website offers information on interest income reporting, which often falls under this category.

Deductions and Exemptions in the Old Regime

One of the biggest advantages of the old regime is the wide range of deductions and exemptions available. These can significantly reduce your taxable income if you plan your finances well.

Popular Deductions

• Section 80C
  Investments and expenses such as Employee Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Savings Certificate (NSC), life insurance premiums, and principal repayment of home loans qualify here. The maximum limit is ₹1.5 lakh per year.
• Section 80D
  Premiums paid for health insurance for self, spouse, children, and parents can be claimed. The limit is ₹25,000 per year, or ₹50,000 if parents are senior citizens.
• Section 24(b)
  Interest paid on home loans for self-occupied property can be claimed up to ₹2 lakh per year.
• Standard Deduction
  Salaried employees and pensioners can claim a flat deduction of ₹50,000.
• HRA and LTA
  House Rent Allowance and Leave Travel Allowance exemptions are available, provided conditions are met.

Why These Matter

If your annual income is ₹12 lakh and you invest ₹1.5 lakh under 80C, pay ₹25,000 health insurance premium, and claim home loan interest of ₹2 lakh, your taxable income can drop to below ₹8.25 lakh under the old regime. This significantly reduces tax liability compared to the new regime, where such deductions are not available.

You can explore complete details of eligible deductions on the official Income Tax Department portal.

What the New Regime Does Not Allow

The new tax regime simplifies filing but removes most of these benefits. You cannot claim:

• Section 80C investments
• HRA, LTA, and other allowances
• Home loan interest (for self-occupied property)
• Medical insurance premiums under Section 80D

The only reliefs still available are the standard deduction, employer’s NPS contribution, and a few specific allowances like transport for disabled employees.

This is why many salaried individuals with home loans or active investments still prefer the old regime.

Surcharge and Marginal Relief

Tax liability does not end with slabs. High-income taxpayers must also account for surcharge, which increases the tax payable once income crosses certain thresholds.

Current Surcharge Rates (FY 2025–26)

These rates apply on the amount of income tax, not directly on income.

Marginal Relief

To ensure fairness, the law provides marginal relief so that the additional tax payable due to surcharge does not exceed the actual income exceeding the threshold. For example, if your income is just above ₹50 lakh, the additional surcharge cannot be higher than the extra income earned.

Detailed surcharge rules and illustrations are available in the Finance Ministry’s updates.

Health and Education Cess

In addition to income tax and surcharge, a 4% Health and Education Cess is levied. This applies uniformly to all taxpayers and is calculated on the final tax amount (including surcharge, if any).

For instance, if your tax after surcharge is ₹1,00,000, an additional ₹4,000 will be payable as cess.

Why Surcharge and Cess Matter in Calculations

Many individuals use online calculators without accounting for surcharge or cess, which leads to underestimation. This is why it is safer to use the official government calculator or trusted platforms like Groww, which automatically include these elements.

How to Use an Income Tax Calculator

An income tax calculator is a simple digital tool that estimates your tax liability based on your income, exemptions, deductions, and chosen regime. It saves time, reduces errors, and helps you make informed decisions before filing.

Step 1: Gather Your Details

Before using any calculator, keep these items ready:

• Annual salary (basic + allowances + perquisites)
• House rent paid and HRA received (if applicable)
• Investments eligible under 80C (PPF, ELSS, LIC, etc.)
• Health insurance premiums (80D)
• Home loan interest details
• Other income (savings account interest, FD interest, rental income, capital gains)

Step 2: Choose Your Regime

Select old regime or new regime. Many calculators allow side-by-side comparison, so you can instantly see which is more beneficial.

Step 3: Enter Income Details

Input your salary, allowances, deductions, and other incomes. Ensure accuracy, as even small errors in numbers can change your results.

Step 4: Review Tax Payable

The calculator will display:

• Taxable income
• Tax under slab rates
• Surcharge (if applicable)
• Health and Education Cess
• Final tax liability under each regime

For reliability, you can try the official government calculator or trusted financial platforms like Moneycontrol.

Example Calculation: Salaried Individual

Let’s take the case of Amit, 35 years old, earning ₹12 lakh annually.

• Standard deduction: ₹50,000 (old regime), ₹75,000 (new regime)
• 80C investments: ₹1.5 lakh
• 80D health insurance: ₹25,000
• Home loan interest: ₹2 lakh

Tax comparison:

In this case, even with higher deductions, Amit pays slightly less under the new regime due to revised slabs and rebate benefits. However, if his deductions were higher, the old regime could still be more advantageous.

Which Regime Should You Choose?

The choice depends on your income structure and how much you invest:

• Prefer the Old Regime if:
  • You claim deductions like 80C, 80D, and home loan interest.
  • You receive allowances such as HRA and LTA.
  • Your total deductions are more than ₹3–4 lakh annually.
• Prefer the New Regime if:
  • You don’t have many investments or exemptions.
  • You prefer a straightforward system without tracking multiple claims.
  • You fall in the middle-income group (₹8–15 lakh range) with limited deductions.

A practical approach is to calculate under both regimes and then select the one with the lower liability when filing your ITR.

Case Study: Senior Citizen

Meera, aged 65, earns ₹10 lakh per year as pension. She pays ₹40,000 as medical insurance premium and invests ₹1.5 lakh under 80C.

• Under the old regime, she benefits from higher exemption limits for senior citizens plus deductions, lowering taxable income significantly.
• Under the new regime, she gets only the ₹75,000 standard deduction, but enjoys lower slab rates.

In her case, the old regime usually provides more savings, especially because of 80D and higher rebate benefits.

Why Comparing Matters

Without running numbers under both regimes, it’s easy to assume one option is always better. But as shown in the examples, the right choice can vary by age, income source, and deductions. An income tax calculator helps you test different scenarios in minutes, ensuring you don’t miss out on savings.

ITR Forms and Filing Deadlines

After calculating your tax liability, the next step is filing your return. The type of ITR form you need depends on your income sources and residential status.

Common ITR Forms for Individuals

• ITR-1 (Sahaj): For salaried individuals or pensioners with total income up to ₹50 lakh, including one house property and interest income.
• ITR-2: For individuals and HUFs with income from more than one house property, capital gains, or income above ₹50 lakh.
• ITR-3: For individuals with income from business or profession.
• ITR-4 (Sugam): For those opting for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE.

More detailed guidance is available on the Income Tax portal.

Important Filing Deadlines

• 31 July 2025: Last date for filing returns for FY 2024–25 (AY 2025–26) without audit.
• 31 October 2025: Deadline for audited taxpayers such as businesses or professionals requiring audit.
• 31 December 2025: Last date for filing belated or revised returns.

Late filing attracts penalties, interest on unpaid tax, and loss of certain carry-forward benefits.

Common Mistakes to Avoid

Many taxpayers miscalculate or overlook small details that can lead to notices or higher liability later.

• Forgetting Other Income: Interest from savings accounts, fixed deposits, or dividends must be declared.
• Ignoring Capital Gains: Even small stock or property sales are taxable and often missed.
• Wrong Regime Selection: Once chosen for a year, the option cannot always be changed (especially for those with business income).
• Skipping Surcharge and Cess: Tax calculators that do not include these may underestimate the final liability.
• Using Outdated Slabs: Always cross-check with the most recent rates published on the official site.

Conclusion

The income tax calculator is more than just a number-crunching tool. It helps you compare regimes, plan investments, and avoid costly mistakes. With the latest updates in Finance Act 2025, middle-income earners now benefit from revised slabs and higher rebates, while those with larger deductions may still find value in the old regime.

To get the most accurate results:

• Collect all income and deduction details in advance.
• Calculate liability under both regimes.
• Review surcharge and cess before finalising.

Finally, file your ITR on time using the correct form to stay compliant. You can start by using the official calculator and explore financial platforms that offer user-friendly comparisons.

Plan early, calculate smartly, and choose the regime that keeps more money in your pocket.

FAQ

What is the latest income tax slab for FY 2025-26?

Under the new regime, income up to ₹4 lakh is tax-free, with rates rising to 30% above ₹24 lakh. Old regime slabs remain unchanged.

Which regime is better: old or new?

The new regime benefits taxpayers with fewer deductions, while the old regime suits those with high investments, home loans, and medical claims.

Can I claim Section 80C under the new tax regime?

No. Section 80C deductions are not allowed under the new regime. They are available only in the old regime.

What is Section 87A rebate for 2025?

For FY 2025-26, taxpayers under the new regime with income up to ₹12 lakh can claim a rebate up to ₹60,000, reducing tax liability to zero.

Do senior citizens have different tax benefits?

Yes. Under the old regime, senior citizens (60–79 years) and super seniors (80+) enjoy higher exemption limits. Under the new regime, rates are uniform.

What is surcharge and when does it apply?

Surcharge applies to incomes above ₹50 lakh at rates from 10% to 37% of tax. Marginal relief ensures the extra tax doesn’t exceed extra income.

Which ITR form should I file?

ITR-1 is for salaried income up to ₹50 lakh, ITR-2 for capital gains or multiple properties, and ITR-3 for business income. Check official ITR guidelines before filing.