Tool
Income Tax Calculator
Old vs New regime comparison for FY 2025-26. Enter your gross income and deductions to see which saves you more.
How income tax is calculated in India
India uses a slab system — you don't pay a flat rate on your entire income. Different portions of your income are taxed at different rates. You start at 0%, move into 5%, then 10% or 20%, and only the income above each threshold is taxed at the higher rate.
Think of it like this: if you earn ₹12 lakhs, you're not paying 15% on everything. You're paying 0% on the first ₹3L, 5% on the next ₹4L, 10% on the next ₹3L, and 15% on the last ₹2L (under the new regime).
The formula
Tax = Slab-wise calculation + 4% Health & Education Cess
Example: ₹12 lakh gross salary →
Taxable = ₹12L − ₹75,000 standard deduction = ₹11.25L
Tax = 0 + (4L × 5%) + (3L × 10%) + (1.25L × 15%) = ₹68,750
But rebate u/s 87A applies since taxable income ≤ ₹12L → Tax = ₹0
Old vs New — who should pick which?
The new regime is simpler and wins for most people with fewer deductions. The old regime wins when your total deductions (80C + 80D + HRA + NPS) are large enough to push your taxable income well below the new regime equivalent.
Rough rule: if you have the full ₹1.5L in 80C, ₹25K in 80D, and claim HRA, you likely save more in the old regime. If you have minimal deductions or are early in your career, the new regime is almost certainly better.
Frequently Asked Questions
Can I switch between old and new regime every year?
Yes, salaried employees can switch every financial year by informing their employer at the start of the year. Business owners with income from a profession or trade can only switch once.
Is NPS available as a deduction under the new regime?
Your employer's NPS contribution (80CCD(2), up to 14% of basic) is deductible even under the new regime. Your own voluntary NPS contribution (80CCD(1B), up to ₹50,000) is not available under the new regime.
What is the standard deduction in FY 2025-26?
₹75,000 under the new regime (increased from ₹50,000). The old regime gives ₹50,000. This is automatically applied — you don't need to declare anything.