Income Tax Calculator
FY 2025-26

Tax IS calculated on your income using the slab rates — it works out to ₹60,000 on ₹12 lakh taxable income. But Section 87A provides a rebate of ₹60,000 for income up to ₹12 lakh, which zeroes out the tax completely. For salaried employees, ₹75,000 standard deduction means CTC up to ₹12,75,000 results in ₹0 tax. This is NOT an exemption — it is a rebate that cancels calculated tax.

If your taxable income is ₹12,10,000, slab calculation gives ₹61,500 tax. But marginal relief ensures your tax cannot exceed the income above ₹12 lakh — so you pay only ₹10,000 (the excess). Without marginal relief, earning ₹10,000 more would cost ₹61,500 in tax — which is absurd. This relief applies between ₹12,00,001 and ₹12,75,000 (approximately). Our calculator handles this automatically.

The breakeven is approximately ₹2.5-4.25 lakh in total deductions depending on your salary. At ₹10 lakh CTC, you need ~₹2.75 lakh (achievable with HRA + 80C). At ₹15 lakh, ~₹3.5 lakh (needs home loan or high HRA). At ₹20 lakh+, ~₹4.25 lakh. If your deductions are below ₹2.5 lakh, new regime wins almost always. Our calculator shows the exact breakeven for your salary.

Only a handful: (1) Standard deduction ₹75,000, (2) Employer NPS contribution under 80CCD(2) up to 14% of salary — this is the BIG one, (3) EPF employer contribution, (4) Gratuity up to ₹20 lakh, (5) Leave encashment on retirement, (6) Home loan interest on let-out property under Section 24(b), (7) NPS maturity/partial withdrawal. Notably MISSING: 80C, 80D, HRA, home loan interest on self-occupied property.

Yes — if you are salaried with no business/profession income, you can switch between old and new regime every financial year when filing your ITR. No lock-in. Business/profession income holders who opt out of new regime can switch back only ONCE. Salaried employees should calculate both regimes annually because your deduction profile changes (new home loan, marriage, parents turning 60 for higher 80D, etc.).

Under new regime: ₹12,75,000 CTC for salaried employees (₹12L taxable after ₹75K standard deduction, fully rebated under 87A). Under old regime: with smart salary restructuring (HRA, LTA, 80C, 80D, NPS), you can push zero-tax CTC to ₹15-17 lakh depending on city and employer flexibility. Our article on zero-tax salary structure covers this in detail.

HRA exemption is the minimum of three: (1) Actual HRA received, (2) Rent paid minus 10% of (Basic + DA), (3) 50% of (Basic + DA) for metro cities or 40% for non-metro. Metro cities for FY 2025-26: Mumbai, Delhi, Kolkata, Chennai. From FY 2026-27: adds Bengaluru, Hyderabad, Pune, Ahmedabad. HRA is available ONLY in the old regime.

Yes. Under 80CCD(2), employer NPS contribution up to 14% of salary (Basic + DA) is deductible in BOTH old and new regimes. On a ₹10 lakh basic salary, that is ₹1.4 lakh tax-free — saving ₹42,000-43,680 in tax (30% slab + cess). Ask your employer to restructure your CTC to include NPS contribution. This is the single highest-impact tax move for new regime taxpayers.

Surcharge is tax on tax: 10% (₹50L-1Cr), 15% (₹1-2Cr), 25% (₹2-5Cr). Above ₹5Cr: 37% in old regime but only 25% in new regime (capped). Marginal relief ensures surcharge does not exceed income above the threshold. For capital gains and dividends, surcharge is capped at 15%. Health & education cess of 4% applies on (tax + surcharge).

Major changes: (1) New regime slabs restructured — new 25% slab at ₹20-24L, (2) Section 87A rebate raised to ₹60,000 (from ₹25,000), (3) Zero tax up to ₹12L income (₹12.75L salaried), (4) Standard deduction raised to ₹75K, (5) Employer NPS cap raised to 14% from 10%, (6) TDS on rent threshold raised to ₹6L/year, (7) Senior citizen interest TDS limit raised to ₹1L, (8) Updated returns allowed for 4 years (from 2).

Section 80D covers health insurance premiums: ₹25,000 for self+family (₹50,000 if senior citizen) + ₹25,000 for parents (₹50,000 if senior citizen parents). Maximum: ₹1,00,000 when both self and parents are senior citizens. Preventive health checkup of ₹5,000 is included within these limits. Cash payments for premiums are NOT allowed. Available only in old regime.

Capital gains are taxed separately at special rates: Equity STCG: 20%, Equity LTCG: 12.5% (above ₹1.25L), Debt fund gains: slab rate, Property LTCG: 12.5% (without indexation from Budget 2024). These are ADDED to your regular tax liability but calculated at their own rates — they do not push your salary into a higher slab. Surcharge on capital gains is capped at 15%.