Income Tax Calculator (India — New vs Old Regime)
Compares income tax liability under both New and Old tax regimes for Indian salaried individuals, incorporating Standard Deduction, 80C, 80D, and Cess.
How This Calculation Formula is Formulated
Under the Indian Income-tax Act, 1961, personal income tax is calculated on net taxable income using progressive tax slabs. In the New Tax Regime (Section 115BAC default from FY 2023-24), tax rates are lower but most itemized deductions are eliminated except standard deduction (₹75,000) and employer NPS (Section 80CCD(2)). In the Old Tax Regime, higher slab rates apply, but taxpayers can claim exemptions under Section 80C (up to ₹1.5L), 80D (health insurance), Section 24(b) home loan interest, and HRA.
Variable Definitions & Measurement Units
Salaried Professional Earning ₹12,00,000 (New vs Old Regime)
Section 87A Full Tax Rebate Threshold
Under Section 87A of the Income-tax Act, resident individual taxpayers whose total taxable income does not exceed ₹7,00,000 under the New Regime pay zero tax due to a maximum rebate of ₹25,000. Under the Old Regime, the rebate applies only up to ₹5,00,000 taxable income (maximum rebate of ₹12,500).
Additionally, marginal relief is provided under the New Regime for individuals whose net taxable income slightly exceeds ₹7,00,000, ensuring that the tax payable does not exceed the amount of income earned above ₹7,00,000.
Frequently Asked Questions About Income Tax Calculator (India — New vs Old Regime)
Which tax regime is better for salaried employees?
For most individuals with total deductions under ₹3.75 Lakhs, the New Regime is generally more beneficial due to lower tax slab rates and higher standard deduction (₹75,000). If you have high home loan interest (Section 24b) and HRA exemptions exceeding ₹4 Lakhs, the Old Regime may still offer tax savings.
Can I switch between New and Old Tax Regimes every year?
Salaried individuals with income from salary, house property, or other sources can choose the most beneficial regime each financial year when filing their ITR. Individuals with business or professional income (ITR-3/4) can only switch back once in their lifetime.
What is the standard deduction in FY 2024-25 and FY 2025-26?
The standard deduction for salaried individuals was raised to ₹75,000 under the New Tax Regime in Budget 2024. Under the Old Tax Regime, it remains ₹50,000.
Is income up to ₹7.75 Lakhs completely tax-free under the New Regime?
Yes. With a gross salary of ₹7,75,000, subtracting the ₹75,000 standard deduction brings net taxable income to exactly ₹7,00,000, which qualifies for a 100% tax rebate under Section 87A, resulting in zero tax liability.
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