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)

Income tax is a direct tax imposed by the Government of India on an individual’s annual income. It is one of the major sources of revenue for the government and helps fund public infrastructure, education, defense, and welfare programs. Every person earning income in India — whether from salary, business, profession, rent, or investments — is required to pay income tax based on their total earnings and applicable deductions.

What Is Income Tax?

Income tax is the percentage of your income paid to the government based on your earnings in a financial year (April 1 to March 31). The tax amount depends on your income slab and the tax regime you choose — Old Tax Regime or New Tax Regime.

Under the Old Regime, taxpayers can claim various deductions and exemptions such as HRA (House Rent Allowance), LTA (Leave Travel Allowance), and Section 80C investments. Under the New Regime, which was introduced in Budget 2020 and later revised in Budget 2023, the government offers lower tax rates but fewer exemptions and deductions.

Old Tax Regime vs New Tax Regime

How Is Income Tax Calculated Under the New Regime?

Under the New Regime, income tax is calculated based on specific slabs and rates announced by the government. These are progressive — meaning the rate increases as your income rises.

Latest New Tax Regime Slabs (FY 2024-25 / AY 2025-26)

Rebate Under Section 87A

To provide relief to middle-income taxpayers, Section 87A offers a rebate to individuals whose taxable income does not exceed ₹7,00,000 under the New Regime. If your taxable income is ₹7 lakh or less, you pay zero tax.

Health and Education Cess (4%)

Once the total tax is computed after rebates, a 4% Health and Education Cess is added to the total tax amount. This cess funds national 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 Before Cess: ₹78,750
• Health & Education Cess (4%): ₹3,150

✅ Final Tax Payable: ₹81,900

How to Use the Income Tax Calculator

1. Enter your Yearly Income in the input box.
2. The calculator automatically applies the ₹75,000 standard deduction.
3. It calculates the tax based on the new slab rates.
4. Applies rebate under Section 87A if eligible.
5. Adds 4% Cess to the total tax.
6. Displays the Final Tax Payable instantly.

Why Use the Online Income Tax Calculator?

• Instant and accurate results
• Zero manual calculations
• Helps plan taxes before filing
• Updated as per latest tax rules
• Completely free and easy to use

Key Takeaways

• The New Tax Regime is simpler with lower tax rates.
• Standard deduction: ₹75,000 for all salaried and pensioners.
• No tax for income up to ₹7,00,000 (due to Section 87A rebate).
• Compare both regimes before filing your ITR.

Final Words

New Tax Regime. Whether you are a salaried employee, freelancer, or retiree, this tool ensures accurate tax planning and clarity before filing your Income Tax Return (ITR).