Income Tax Calculator (New Regime) - FY 2025-26 (AY 2026-27)

Understanding Income Tax in India and How to Use the Income Tax Calculator (New Regime – FY 2025–26)

Income tax is a direct tax imposed by the Government of India on an individual’s annual income. It helps fund public infrastructure, education, defense, and welfare programs. Anyone earning income in India — whether from salary, business, profession, rent, or investments — must pay tax based on their total income and the tax regime chosen.

What Is Income Tax?

Income tax is the percentage of your annual earnings paid to the government during a financial year (April 1 to March 31). The payable tax depends on income slabs and the tax regime — Old Regime or New Regime.

The Old Regime allows many deductions such as Section 80C, 80D, HRA, LTA, etc. The New Regime offers lower tax rates but very limited deductions, and from Budget 2023 onwards, it is the default regime.

Old Tax Regime vs New Tax Regime

How Is Income Tax Calculated Under the New Regime?

Under the New Regime, income tax is calculated using progressive slabs. The tax increases as income increases.

New Tax Regime Slabs - FY 2025-26 (AY 2026-27)

Rebate Under Section 87A (FY 2025-26)

Under the New Regime for FY 2025-26, Section 87A rebate is available only if your taxable income does not exceed ₹12,00,000.

If taxable income ≤ ₹12 lakh:
You get a rebate of up to ₹60,000, making your tax liability zero.

Health and Education Cess (4%)

After calculating total tax (post rebate), an additional 4% cess is added to fund education and healthcare programs.

Example: Income Tax Calculation (New Regime)

Example: Annual income ₹12,00,000

• Standard Deduction: ₹75,000
• Taxable Income: ₹11,25,000
• Tax (using slab rates): ₹52,500
• Rebate: ₹52,500 (taxable income ≤ ₹12,00,000 is required for rebate check)
• Health & Education Cess (4%): ₹0

✅ Final Tax Payable: ₹0

How to Use the Income Tax Calculator

1. Enter your Yearly Income.
2. The calculator applies the ₹75,000 standard deduction automatically.
3. It calculates tax as per new slab rates.
4. Applies Section 87A rebate only if taxable income ≤ ₹12,00,000.
5. Adds 4% cess.
6. Displays the Final Tax Payable.

Why Use the Online Income Tax Calculator?

• Instant and accurate results
• No manual calculations
• Helps in tax planning
• Updated with latest tax rules
• Easy and free to use

Key Takeaways

• The New Tax Regime is now the default.
• Standard deduction: ₹75,000
• Zero tax if taxable income ≤ ₹12,00,000 (after rebate).
• Always compare both regimes before filing ITR.

Final Words

The updated New Tax Regime makes taxation simpler and more transparent. Whether you are a salaried employee, freelancer, or retiree, this calculator ensures accurate tax planning and clarity before filing your Income Tax Return (ITR).