Income Tax Estimator FY 2025-26 — Old vs New Regime Comparison
Compare your tax liability under the Old and New Regime for FY 2025-26 (Budget 2025 slabs). Enter income and deductions to see which regime saves more — with 87A rebate, surcharge, and cess. Income up to ₹12.75L is now tax-free under New Regime.
How to Use This Tax Estimator
- 1Enter your Annual CTC or Gross Income — this is your total salary before any deductions.
- 2Enter your Section 80C investments — PPF, ELSS, LIC, home loan principal, NSC etc. (max ₹1.5 lakh). These only benefit you under the Old Regime.
- 3Enter your Section 80D medical insurance premium paid for yourself and your family (max ₹25,000; up to ₹50,000 for senior citizens).
- 4Add your HRA Exemption if you live in rented accommodation. Your employer or a CA can help compute the exact exempt amount.
- 5See the instant comparison — the tool highlights which regime results in lower tax and by exactly how much, with a full slab-wise breakdown for both regimes.
How Income Tax is Calculated in India
Indian income tax is calculated in progressive slabs — higher income portions are taxed at higher rates. The calculation follows these steps:
Calculation Steps
New Regime Slabs (FY 2025-26)
| Income Range | Rate |
|---|---|
| Up to ₹4 lakh | 0% |
| ₹4L – ₹8L | 5% |
| ₹8L – ₹12L | 10% |
| ₹12L – ₹16L | 15% |
| ₹16L – ₹20L | 20% |
| ₹20L – ₹24L | 25% |
| Above ₹24L | 30% |
Old Regime Slabs (FY 2025-26)
| Income Range | Rate |
|---|---|
| Up to ₹2.5 lakh | 0% |
| ₹2.5L – ₹5L | 5% |
| ₹5L – ₹10L | 20% |
| Above ₹10L | 30% |
+ ₹50,000 standard deduction + 80C, 80D, HRA, other deductions
Worked Example: ₹12 Lakh Gross Income
Inputs: Gross Income = ₹12,00,000 | 80C = ₹1,50,000 | 80D = ₹25,000 | HRA = ₹1,20,000
Old Regime
| Gross Income | ₹12,00,000 |
| Standard Deduction | − ₹50,000 |
| 80C | − ₹1,50,000 |
| 80D | − ₹25,000 |
| HRA Exemption | − ₹1,20,000 |
| Taxable Income | ₹8,55,000 |
| Slab Tax | ₹83,500 |
| Cess (4%) | ₹3,340 |
| Total Tax | ≈ ₹86,840 |
New Regime
| Gross Income | ₹12,00,000 |
| Standard Deduction | − ₹75,000 |
| 80C / 80D / HRA | Not allowed |
| Taxable Income | ₹11,25,000 |
| Slab Tax | ₹52,500 |
| 87A Rebate | − ₹52,500 |
| Cess (4%) | ₹0 |
| Total Tax | ₹0 |
Common Tax Mistakes to Avoid
Not comparing both regimes before filing
Many taxpayers auto-select the default New Regime without checking whether their deductions make the Old Regime more beneficial. With significant 80C, HRA, and 80D deductions, Old Regime often saves ₹20,000–₹80,000 or more.
Forgetting the standard deduction
Standard deduction (₹75,000 in New Regime, ₹50,000 in Old Regime) is automatic — you do not need to invest or submit any proof. Many salaried individuals incorrectly compute tax on their full gross salary without subtracting it first.
Missing the Section 87A rebate
If your taxable income is ₹7 lakh or below (New Regime) or ₹5 lakh or below (Old Regime), you pay zero tax after the rebate. Many people with income just above the basic exemption unnecessarily pay tax without checking the rebate.
Confusing gross income with net taxable income
Your CTC or gross salary is not your taxable income. You must subtract standard deduction, HRA exemption, and other deductions first. Filing tax on gross salary leads to significant overpayment.
Frequently Asked Questions
Q: Which tax regime should I choose — old or new?
It depends on your deductions. If you have significant 80C investments (PPF, ELSS, LIC), HRA, and 80D premiums, the Old Regime often results in lower tax. If you have minimal deductions, the New Regime — with its lower slab rates and ₹75,000 standard deduction — usually wins. Use this calculator to compare both instantly.
Q: Can I switch between the old and new regime every year?
Salaried individuals (without business income) can switch between regimes every financial year. However, individuals with business or professional income who opt out of the New Regime can switch back only once in a lifetime. The New Regime is the default from FY 2023-24 — you must actively opt for the Old Regime in your ITR.
Q: What is the standard deduction for FY 2025-26?
The standard deduction is ₹75,000 under the New Regime and ₹50,000 under the Old Regime for FY 2025-26 (AY 2026-27). It is automatically available to all salaried individuals and pensioners — no proof or investment is required.
Q: What investments qualify under Section 80C?
Section 80C covers a wide range of investments up to ₹1,50,000: PPF (Public Provident Fund), ELSS mutual funds, NSC (National Savings Certificate), 5-year tax-saving FDs, life insurance premiums (LIC), home loan principal repayment, Sukanya Samriddhi Yojana, NPS (partial), children's tuition fees, and ULIP premiums. It is available only in the Old Regime.
Q: Can I claim HRA exemption under the New Regime?
No. HRA (House Rent Allowance) exemption is not available under the New Regime. If you pay significant rent and your HRA exemption is large, this is a major factor that may make the Old Regime more beneficial. Use this calculator with your actual HRA figures to compare.
Q: What is the Rebate u/s 87A and how is it applied?
Section 87A provides a tax rebate that reduces your tax liability to zero if your net taxable income is below a threshold. Under the New Regime (FY 2025-26): rebate up to ₹60,000 if taxable income ≤ ₹12 lakh — effectively making gross income up to ₹12.75 lakh completely tax-free (after ₹75,000 standard deduction). Under the Old Regime: rebate up to ₹12,500 if taxable income ≤ ₹5 lakh. The rebate is applied after computing tax on slabs but before adding cess.
Q: What is surcharge, and when does it apply?
Surcharge is an additional levy on income tax for high-income taxpayers: 10% surcharge if income exceeds ₹50 lakh, 15% if income exceeds ₹1 crore, 25% if income exceeds ₹2 crore (capped at 25% for New Regime), and 37% if income exceeds ₹5 crore (Old Regime only). Surcharge applies to the income tax amount (not the income itself).
Q: What is Health and Education Cess?
Health and Education Cess is 4% levied on total income tax plus surcharge. It is mandatory for all taxpayers and cannot be avoided. The revenue funds the government's education and health initiatives. This calculator automatically adds 4% cess on top of your tax + surcharge.
Q: When is advance tax required?
If your estimated total tax liability for the year (after TDS) exceeds ₹10,000, you must pay advance tax in four instalments: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. Failure attracts interest under Section 234B and 234C. Salaried individuals whose employer deducts TDS correctly are generally exempt.
Q: What is the difference between FY and AY?
FY (Financial Year) is the year in which you earn income — April 1 to March 31. AY (Assessment Year) is the year in which you file your ITR and pay tax on that income — the year immediately following the FY. For income earned in FY 2025-26 (April 2025 to March 2026), you file your ITR in AY 2026-27. This calculator covers FY 2025-26 / AY 2026-27.