India has two income tax regimes — the New Regime (default since FY 2023-24, with simpler slabs and a higher standard deduction but no major exemptions) and the Old Regime (the original system with 80C, 80D, HRA, and other deductions). The calculator runs both, applies the 87A rebate where eligible, adds the 4% health and education cess, and tells you which regime saves you more.
What is Income Tax India?
Indian income tax is calculated on your taxable income for the financial year (April 1 to March 31), then a 4% Health and Education Cess is added on top of the tax. Salaried individuals can choose between two regimes every year. People with business income can also choose, but switching back to the old regime after picking new is a one-time-only option.
The New Regime offers a higher standard deduction (₹75,000 for FY 2024-25, up from ₹50,000 the year before) and lower slab rates, but no other major deductions. So 80C investments, HRA, home loan interest, LTA, and most other exemptions are not allowed under it. It is the default since FY 2023-24 — if you do not actively choose the old regime, the new regime applies.
The Old Regime has higher slab rates but a long list of deductions: ₹1.5 lakh under 80C, ₹25,000–₹1 lakh under 80D, HRA exemption, home loan interest up to ₹2 lakh under Section 24, education loan interest, donations under 80G, NPS contributions, and so on. Whether the old or new regime saves more depends entirely on how many of these deductions you actually claim.
This calculator runs the math for both regimes side by side using FY 2024-25 (Assessment Year 2025-26) slabs from Union Budget 2024, applies the Section 87A rebate (which makes tax effectively zero up to ₹7 lakh under new regime and ₹5 lakh under old regime), adds 4% cess, and tells you the better option for your specific situation.
Tax slabs for FY 2024-25 (AY 2025-26)
New Regime slabs (after ₹75,000 standard deduction): 0% up to ₹3 lakh, 5% from ₹3-7 lakh, 10% from ₹7-10 lakh, 15% from ₹10-12 lakh, 20% from ₹12-15 lakh, 30% above ₹15 lakh.
Old Regime slabs (after ₹50,000 standard deduction + your other deductions): 0% up to ₹2.5 lakh (₹3 lakh for ages 60–80, ₹5 lakh for 80+), 5% from ₹2.5-5 lakh, 20% from ₹5-10 lakh, 30% above ₹10 lakh.
Rebate u/s 87A: If your taxable income is up to ₹7 lakh under new regime or ₹5 lakh under old regime, the entire tax is rebated — meaning you pay zero. This is a deduction from the calculated tax, not an exemption from income.
Cess: A 4% Health and Education Cess is applied on the calculated tax (post-rebate). It is not a separate slab but a multiplier on whatever tax remains.
- Slab Tax
- Tax on income—applied progressively across slabs (you do not pay 30% on your full income, only on the part above the 30% threshold)
- 87A Rebate
- Rebate—max ₹25,000 (new regime) or ₹12,500 (old regime); only if taxable income is at or below the rebate threshold
- 1.04
- Cess multiplier—Health and Education Cess at 4% on top of the tax
How to use this calculator
Enter your annual figures below. The calculator runs both regimes simultaneously and recommends the better one with the savings amount highlighted.
Enter your annual gross income
Total taxable income for the year — salary CTC less employer's PF contribution and gratuity (these are not part of taxable salary), plus any other income (interest, rental, freelance). Include the salary you actually receive in your hand plus benefits, before deductions.
Enter 80C investments
Maximum ₹1.5 lakh per year. Includes EPF (your contribution, not employer's), PPF, ELSS mutual funds, life insurance premiums, principal on home loan, NSC, tuition fees for two children, 5-year tax-saver FD. Only relevant for the old regime.
Enter 80D health insurance premiums
Up to ₹25,000 for self + family; another ₹25,000 (₹50,000 if 60+) for parents' health insurance. ₹5,000 of preventive health check-up is included within these limits.
Enter home loan interest
Section 24 allows up to ₹2 lakh deduction on interest paid for a self-occupied property home loan. For let-out properties there is no upper cap. Old regime only.
Enter HRA exemption
If you live in a rented home and your salary includes HRA, calculate the exempt portion using our HRA Exemption Calculator and enter the result here. Old regime only.
Pick your age group
Senior citizen (60–80) gets a higher basic exemption of ₹3 lakh under old regime. Super senior (80+) gets ₹5 lakh. Below 60 gets ₹2.5 lakh. Does not affect the new regime.
Read both regime totals
The calculator shows tax under each regime, the amount you save by picking the better one, and a side-by-side comparison table. The recommendation considers post-rebate, post-cess totals.
When this calculator is most useful
Choosing the regime at the start of FY
Salaried employees declare regime preference to their employer in April or May. Run the calculator with realistic deduction estimates to lock the better regime for the year.
Making investment decisions
Should you put ₹1.5 lakh in 80C? The new regime ignores it entirely. Run both regimes to see if the deduction is actually saving more tax than the new regime's lower rates would.
Tax planning before March 31
If old regime saves more for you, March is the deadline for last-minute 80C/80D investments. If new regime wins, no need to rush.
Renting vs buying decision
Calculate tax under the old regime with HRA exemption (renting) vs without (owning, with home loan interest under Section 24). Often surprising — renting is sometimes more tax-efficient than people assume.
Salary negotiation
When negotiating CTC, the take-home matters more than the gross. Plug different gross amounts to see how the post-tax figure changes — especially around slab boundaries (₹7L, ₹10L, ₹12L, ₹15L) where rates jump.
Senior citizen tax planning
Higher basic exemption + 80TTB (₹50,000 interest income deduction, old regime only) + senior citizen FD rate boost. Run the old regime numbers carefully — it almost always wins for retirees.
Common mistakes to avoid
Picking the new regime just because it is the default
If you have meaningful 80C, 80D, HRA, or home loan interest, the old regime can save you ₹30,000–₹1.5 lakh per year. Always run both regimes before declaring to your employer.
Forgetting that LTA, gratuity, leave encashment exemptions are old-regime only
If you regularly receive LTA or expect a large gratuity payout this year, the old regime preserves these exemptions. Account for them when comparing.
Including employer's PF contribution in gross income
Employer PF (12% of basic) is not part of your taxable salary. Subtract it from your CTC before entering. Same for gratuity provision.
Missing 80CCD(1B) — extra ₹50,000 NPS deduction
Available only under old regime, on top of the ₹1.5 lakh 80C limit. Add this if you contribute to NPS Tier I.
Forgetting Section 80TTA / 80TTB on savings interest
₹10,000 of savings account interest is deductible under 80TTA (under-60). Senior citizens get ₹50,000 under 80TTB on interest from any source. Old regime only.
Treating the calculator output as final tax payable
Surcharge, marginal relief, advance tax/TDS already paid, and self-assessment tax all affect the actual amount due. The calculator gives the gross tax liability, not the cheque you write to the IT department.
Glossary
- Financial Year (FY)
- The year you earn income — runs April 1 to March 31. FY 2024-25 means earnings from 1 April 2024 to 31 March 2025.
- Assessment Year (AY)
- The year you file the return for the previous FY. AY 2025-26 corresponds to FY 2024-25 income.
- Standard deduction
- A flat amount subtracted from salary income. ₹50,000 in old regime, ₹75,000 in new regime (FY 2024-25 onward). Available only for salaried and pensioners.
- Section 80C
- Allows up to ₹1.5 lakh deduction for specified investments and expenses — EPF, PPF, ELSS, life insurance, home loan principal, tuition fees, NSC, tax-saver FD, etc. Old regime only.
- Section 80D
- Health insurance premium deduction. ₹25,000 for self/family, plus ₹25,000 (₹50,000 if 60+) for parents. Old regime only.
- Section 24
- Home loan interest deduction — up to ₹2 lakh for self-occupied property, no cap for let-out. Old regime only.
- HRA (House Rent Allowance)
- A salary component for renting employees. The exempt portion is the lowest of three values — see the dedicated HRA Exemption Calculator. Old regime only.
- Section 87A Rebate
- A direct rebate on tax (not deduction from income) — up to ₹25,000 in new regime (income ≤ ₹7L), up to ₹12,500 in old regime (income ≤ ₹5L). Makes tax effectively zero at those thresholds.
- Health and Education Cess
- A flat 4% multiplier added to your final tax. Always applied unless tax is zero.
- Surcharge
- An extra tax on tax for high earners. Applies above ₹50 lakh income, increasing in slabs to 37% (old) or 25% (new) at ₹5 crore and above.
- TDS (Tax Deducted at Source)
- Tax your employer or bank deducts upfront and pays to the government. Reconciled at year-end against your total tax liability.
- Marginal relief
- A safety provision: your tax cannot exceed the amount of income above the rebate threshold. Protects taxpayers just above ₹7L (new) / ₹5L (old) from a steep tax cliff.
Frequently asked questions
Which tax regime should I choose?
Can I switch between regimes every year?
What is the 87A rebate?
References
- Income Tax India — Official income tax e-filing portal— Income Tax Department
- Union Budget 2024 — speech and finance bill— Ministry of Finance
- Income Tax Act 1961 (text)— Income Tax Department