Individuals have the option to file taxes under either the old or new tax regimes, with each offering different regulations and deductions. To accurately calculate your tax liabilities, you can use our income tax calculator, which is a cost-effective alternative to hiring a professional tax consultant. This tool not only helps you understand your tax obligations but also simplifies the process of comparing both regimes.
Explore how the tax calculator works, their benefits, and how they can streamline your tax planning for smarter financial decisions.
What is the Income Tax Calculator?
The Income tax calculator is an easy-to-use online tool that helps you calculate your tax liability based on your income details. It also gives you a comparison of tax liability between the old and new tax regimes to help you decide which is more beneficial for you. We have updated our tool in line with the income tax changes proposed in the Union Budget 2024-25 to help you estimate your tax liability for better financial planning.
How to Use the Income Tax Calculator for FY 2024-25 (AY 2025-26) and FY 2023-24(AY 2024-25)?
Following are the steps to use the tax calculator:
Step 1: Choose the financial year for which you want your taxes to be calculated.
Step 2: Select your age accordingly. Tax liability under the old regime differs based on the age groups.
Step 3: Click on ‘Continue’
Step 4: Enter your taxable salary, i.e. salary after deducting various exemptions such as HRA, LTA and so on. (if you want to know your tax liability under the old tax slabs) Or just enter your salary, i.e., salary, without availing of exemptions such as HRA, LTA, professional tax, etc. (if you want to know your tax liability under the new tax slabs)
Step 5: Along with taxable salary, you must enter other details such as interest income, rental income, interest paid on home loan for rented, and interest paid on loan for self-occupied property.
Step 6: For Income from Digital Assets, enter the net income (Sale consideration (-) Cost of Acquisition).
Step 7: Click on 'Continue’ again.
Step 8: If you want to calculate your taxes under the old tax slabs, you will have to enter your tax-saving investments under sections 80C, 80D, 80G, 80E, and 80TTA.
Step 9: Click on 'Calculate' to calculate your tax liability. You will be able to compare the old and new tax regimes.
How to Calculate Income Tax on Salary with Example
To calculate Income tax, include income from all sources. Include:
- Income from Salary
- Income from House Property
- Income from Capital Gains
- Income from Business/Profession
- Income from Other Sources
Income tax calculation for the Salaried
Income from salary = Basic salary + HRA + Special Allowance + Transport Allowance + any other allowance.
Some components of your salary are exempt from tax, such as telephone bill reimbursement and leave travel allowance. If you receive HRA and live on rent, you can claim an exemption on HRA. Calculate the exempt portion of HRA using this HRA Calculator.
On top of these exemptions, a standard deduction of 50,000 is available in both old and new regimes. This has been increased to Rs. 75,000 in Latest Budget 2024 only under the New Regime.
Let's understand income tax calculation under both old and new tax regimes by way of an example: Neha receives a Basic Salary of Rs 1,00,000 per month. HRA of Rs 50,000. Special Allowance of Rs 21,000 per month. LTA of Rs 20,000 annually. Neha pays a rent of Rs 40,000 and lives in Delhi.
Nature | Amount | Exemption/Deduction | Taxable Income (Old regime) | Taxable Income (New regime) |
Basic Salary | 12,00,000 | - | 12,00,000 | 12,00,000 |
HRA | 6,00,000 | 3,60,000 | 2,40,000 | 6,00,000 |
Special Allowance | 2,52,000 | - | 2,52,000 | 2,52,000 |
LTA | 20,000 | 12,000 (bills submitted) | 8,000 | 20,000 |
Standard Deduction | - | 50,000 | 50,000 | 75,000 |
Gross Total Income from Salary | 16,50,000 | 19,97,000 |
Neha has income from interest from a savings account of Rs 8,000 and a fixed deposit interest income of Rs 12,000 during the year. Neha has made some investments to save income tax. PPF investment of Rs 50,000. ELSS purchase of Rs 20,000 during the year. LIC premium of Rs 8,000. Medical insurance paid of Rs 12,000. Here are the deductions Neha can claim under the old tax regime.
Nature | Maximum Deduction | Eligible investments/expenses | Amount claimed by Neha |
Section 80C | Rs.1,50,000 | PPF deposit Rs 50,000, ELSS investment Rs 20,000, LIC premium Rs 8,000. EPF deducted by employer (Neha’s contribution) = Rs 1,00,000 *12% *12 = 1,44,000 | Rs 1,50,000 |
Section 80D | Rs 25,000 for self Rs 50,000 for parents | Medical insurance premium Rs 12,000 | Rs 12,000 |
Section 80TTA | Rs.10,000 | Savings account interest 8,000 | Rs. 8,000 |
Calculation of gross taxable income and tax liability in India (Old regime):
Nature | Amount | Total |
Income from Salary | 16,50,000 | |
Less: Std Deduction | 50,000 | |
Income from Other Sources | 20,000 | |
Gross Total Income | 16,70,000 | |
Deductions | ||
80C | 1,50,000 | |
80D | 12,000 | - |
80TTA | 8,000 | 1,70,000 |
Gross Taxable Income | 15,00,000 | |
Total tax on above (including cess) | 2,73,000 |
Calculation of gross taxable income and tax liability in India (New regime):
Nature | Amount | Total |
Income from Salary | 19,97,000 | |
Less: Std Deduction | 75,000 | |
Income from Other Sources | 20,000 | |
Gross Total Income | 19,42,000 | |
Total tax on above (including cess) | 2,83,504 |
Slab Rates Under New and Old Regime
The slab rates are different under the new and old regimes. Under the old regime, the rates vary based on age: individuals under 60, those between 60 and 80, and those over 80. Under the new regime, the tax slabs are the same for all age groups.
The tax slabs under the old regime are as follows:
Slabs (Rs.) | Individuals (Age < 60 years) | Resident Senior Citizens (>60 but <80 years) | Resident Super Senior Citizens (80 years and above) |
Upto 2,50,000 | Nil | Nil | Nil |
2,50,001 - 3,00,000 | 5% | Nil | Nil |
3,00,001 - 5,00,000 | 5% | 5% | Nil |
5,00,000 - 10,00,000 | 20% | 20% | 20% |
Above 10,00,000 | 30% | 30% | 30% |
The tax slabs under the new regime is as follows:
Tax Slab for FY 2023-24 | Tax Rate | Tax Slab for FY 2024-25 | Tax Rate |
Upto 3,00,000 | Nil | Upto 3,00,000 | Nil |
3,00,001 - 6,00,000 | 5% | 3,00,001 - 7,00,000 | 5% |
6,00,001 - 9,00,000 | 10% | 7,00,001 - 10,00,000 | 10% |
9,00,001 - 12,00,000 | 15% | 10,00,001 - 12,00,000 | 15% |
12,00,001 - 15,00,000 | 20% | 12,00,001 - 15,00,000 | 20% |
Above 15,00,000 | 30% | Above 15,00,000 | 30% |
Surcharge and Education Cess:
If your income exceeds a certain threshold, you will incur additional taxes on top of the existing rates. This additional tax specifically targets high-income earners.
The surcharge rates are as follows:
- 10% of Income tax if total income > Rs.50 lakh and < Rs.1 crore,
- 15% of Income tax if total income > Rs.1 crore and < Rs.2 crore,
- 25% of Income tax if total income > Rs.2 crore and < Rs.5 crore,
- 37% of Income tax if total income > Rs.5 crore
Note: The highest surcharge rate of 37% has been reduced to 25% under the new tax regime, effective from April 1, 2023.
Additional Health and Education cess at the rate of 4% will be added to the income tax liability.
Note: There are certain deductions/exemptions which are not available under the New regime. Click here to know about the exemptions/deductions that are not available under the New regime.
Benefits of Using Income Tax Calculator
Using our online Income tax calculator offers several benefits such as:
Accuracy
Income tax calculator calculates your tax liability accurately eliminating any potential errors that result from calculating the tax liability manually.
Swift and Hassle-free
The Income tax calculator is a tool which calculates your tax liability swiftly within few seconds and can be used anytime and anywhere.
User-friendly
The Income tax calculator is a very user-friendly tool. Simply input your income and deduction details to accurately calculate your tax liability.
Better Financial Management and Tax Planning
Understanding your tax liability in advance is essential for effective financial planning. By knowing your potential tax obligations, you can allocate your budget wisely and invest in tax-saving instruments like ELSS, PPF,etc. to reduce the tax liability.