What is an Income Tax Calculator?
An income tax calculator is a specialized digital tool designed to estimate your tax liability based on your annual earnings, the specific tax slab you fall under, and eligible deductions. In India, individuals earning above a specific threshold are mandated to pay a percentage of their net annual income to the government. Taxpayers can opt between the 'Old Regime' (which offers various deductions) and the 'New Regime' (which offers lower tax rates but fewer exemptions). This tool helps you accurately predict your dues before the filing deadline.
Budget 2025: Key Income Tax Updates
- Tax Rebate Hike: The Section 87A rebate limit has been increased to ₹60,000. This effectively means zero tax liability for income up to ₹12 Lakhs under the New Regime.
- Higher Standard Deduction: The standard deduction for salaried employees has been raised to ₹75,000.
- Rental TDS Revision: The TDS threshold on rent payments has been increased to ₹50,000 per month.
- Senior Citizen Relief: Tax deduction limit on interest income for senior citizens is now ₹1,00,000.
Revised Income Tax Slabs (FY 2025-26)
| Income Range | Tax Rate (New Regime) |
|---|---|
| Up to ₹4 Lakhs | Nil |
| ₹4 Lakhs - ₹8 Lakhs | 5% |
| ₹8 Lakhs - ₹12 Lakhs | 10% |
| ₹12 Lakhs - ₹16 Lakhs | 15% |
| ₹16 Lakhs - ₹20 Lakhs | 20% |
| ₹20 Lakhs - ₹24 Lakhs | 25% |
| Above ₹24 Lakhs | 30% |
How to Use Finzony’s Income Tax Calculator?
- Select Year: Choose the assessment year (e.g., AY 2026-27 for FY 2025-26).
- Enter Income: Input your Gross Salary (excluding deductions), interest income, and rental income.
- Add Deductions: If choosing the Old Regime, enter your investments under 80C (PPF, ELSS), 80D (Health Insurance), and NPS contributions.
- Check HRA: If eligible, input your Basic Salary, DA, and Rent Paid to calculate HRA exemptions.
- Get Results: The calculator will instantly display your total tax liability, cess, and effective tax rate.
How is Income Tax Calculated on Salary?
- Calculate Gross Salary: Sum of basic salary, allowances, and bonuses.
- Subtract Exemptions: Remove standard deduction (₹75,000 under New Regime), HRA, and LTA.
- Subtract Deductions: Deduct investments under Section 80C, 80D, etc. (Old Regime only).
- Determine Taxable Income: This is your Net Income subject to tax.
- Apply Tax Slabs: Calculate tax based on the new progressive slab rates.
- Add Cess: A 4% Health and Education Cess is added to the tax amount.
Tax Calculation Example (New Regime)
Let's assume an individual has a Gross Annual Salary of ₹18,00,000 and Other Income of ₹35,000.
Tax Liability Breakdown
Why Use an Online Tax Calculator?
- Accuracy: Eliminates human calculation errors.
- Speed: Instant results compared to manual computation.
- Comparison: Easily compare Old vs. New regime to see which saves more money.
- Planning: Helps you allocate investments (like ELSS or PPF) well before the March deadline.
- Privacy: Securely calculate liabilities without exposing data to third parties.
Frequently Asked Questions
Is income up to ₹12 Lakhs really tax-free?
Under the New Regime for FY 2025-26, the tax rebate under Section 87A has been increased to ₹60,000. Since the tax on income up to ₹12 Lakhs comes to ₹60,000, the rebate offsets it completely, making it effectively tax-free.
What is the new Standard Deduction limit?
The Standard Deduction for salaried employees has been increased to ₹75,000 in the New Tax Regime.
Can I switch between Old and New regimes?
Yes, salaried individuals can choose the most beneficial regime every financial year. However, individuals with business income can only switch back once in their lifetime.
Are deductions like 80C available in the New Regime?
No, common deductions like 80C (PPF/LIC), 80D (Medical), and HRA are not available in the New Regime. They are exclusive to the Old Regime.
Does this calculator support Senior Citizens?
Yes, you can select your age category. Senior citizens (60-80 years) and Super Senior citizens (80+) have different basic exemption limits under the Old Regime.