Income Tax Calculator
Compare New vs Old Tax Regime · Zero tax up to ₹12.75L · Updated for Income Tax Act 2025 (effective April 1, 2026)
Income Tax Act 2025 Replaces the 1961 Act
The 65-year-old Income Tax Act, 1961 is replaced by a modern, simplified code — reduced from 819 to 536 sections. Same tax rates, dramatically clearer language. Effective April 1, 2026.
"Tax Year" Replaces FY & AY
No more confusion between Financial Year and Assessment Year. Income earned April 2026–March 2027 is simply Tax Year 2026-27. One term, one year. Simpler for everyone.
Key Tax Forms Renumbered
Common forms get new numbers: Form 16 → Form 130 (salary TDS certificate); Form 26AS → Form 168 (tax credit statement). Same data, new reference numbers — update your HR records accordingly.
₹100 → ₹3,000 / Month Per Child
Children's education allowance raised 30× — from ₹100 to ₹3,000 per month per child (max 2 children). Annual saving: up to ₹72,000 tax-free from your salary. Declare to HR immediately.
₹300 → ₹9,000 / Month Per Child
Hostel allowance for children raised 30× — from ₹300 to ₹9,000 per month per child (max 2 children). Parents paying hostel fees can now save up to ₹2,16,000/year tax-free.
Meal Vouchers & Corporate Gifts Updated
Meal coupons/vouchers raised from ₹50 to ₹200 per meal (no daily cap — 2 meals/day × 22 working days = ~₹8,800/month tax-free). Non-cash corporate gifts raised from ₹5,000 to ₹15,000 per year tax-free from employer.
Bengaluru, Pune, Hyderabad & Ahmedabad Now 50%
The 50% HRA exemption (previously only Delhi, Mumbai, Kolkata, Chennai) now extends to Bengaluru, Pune, Hyderabad & Ahmedabad. Employees in these cities get ~₹10,000–₹25,000 more tax-free HRA annually.
Taxable Value Standardised at 10%
For company-provided rent-free accommodation in major cities, the taxable perquisite value is now standardised at 10% of salary. Replaces the older tiered city-population-based formula, making payroll simpler.
Higher Securities Transaction Tax on F&O
STT on Futures raised from 0.02% to 0.05%; on Options from 0.1% to 0.15%. Active F&O traders will see higher transaction costs. Equity delivery and mutual fund transactions are unaffected.
SGB Secondary Market Gains Now Taxable
Gains from selling SGBs on the secondary market are now taxable at 12.5% LTCG (above ₹1.25L exemption). Only original subscribers who hold to maturity keep the full tax-free benefit.
Buyback Tax Shifts to Shareholder
Share buybacks are no longer taxed at company level. Instead, shareholders receive proceeds taxed as capital gains — 12.5% LTCG if held 12+ months. Better outcome for most long-term retail investors.
ITR-3/4 Deadline Extended to August 31
Non-audit taxpayers (freelancers, business owners on ITR-3/4) now have until August 31 to file (was July 31). Salaried individuals filing ITR-1/2 still have a July 31 deadline.
12 Months to Fix Errors in Your Return
The window to file a revised return is extended to 12 months after the tax year ends (previously December 31 of the AY). A nominal late fee applies if revised after 9 months. More time to catch mistakes.
Uniform 2% TCS on LRS Remittances
A flat 2% TCS now applies to most LRS (Liberalised Remittance Scheme) outflows — foreign travel packages, overseas education, medical. Replaces the previous complex 5%/20% slabs. Credited against your tax liability.
Income Details
Deductions (Old Regime only)
| Income Slab | Rate | Tax on Slab | Status |
|---|
Zero tax up to: ₹12,75,000 (salaried)
87A Rebate: ₹60,000 (if taxable ≤ ₹12L)
Basic Exemption: ₹4,00,000
30% slab starts at: ₹24,00,000
Zero tax up to: ₹5,50,000 (after std ded)
87A Rebate: ₹12,500 (if taxable ≤ ₹5L)
Basic Exemption: ₹2,50,000
All deductions (80C, 80D, HRA, etc.) allowed
Income Tax in India — FY 2025-26
Income tax in India is levied by the Central Government on the annual income of individuals, HUFs, firms, and companies. For salaried individuals, the most relevant tax is on "Income from Salaries." Under the Finance Act 2025, the New Tax Regime has been made significantly more attractive with higher slabs, a larger standard deduction, and a higher rebate limit — making it the default and preferred regime for most taxpayers.
Income Tax FY 2026-27 — What Changes from April 1, 2026?
Budget 2026 confirmed that income tax slabs and rates remain unchanged for FY 2026-27. The big change is structural: the Income Tax Act, 2025 replaces the 1961 Act from April 1, 2026. Here is a summary of what changes and what stays the same:
| Item | FY 2025-26 (Old Law) | FY 2026-27 (Income Tax Act 2025) |
|---|---|---|
| SLABS & RATES | ||
| New Regime Slabs | 7 slabs, 0%–30% | Unchanged ✅ |
| Standard Deduction (New Regime) | ₹75,000 | Unchanged ✅ |
| Section 87A Rebate (New Regime) | ₹60,000 (taxable ≤ ₹12L) | Unchanged ✅ |
| STRUCTURAL & TERMINOLOGY | ||
| Governing Law | Income Tax Act, 1961 | Income Tax Act, 2025 🆕 |
| Year Terminology | Financial Year + Assessment Year | Single "Tax Year" 🆕 |
| Salary TDS Certificate | Form 16 | Form 130 🆕 |
| Tax Credit Statement | Form 26AS | Form 168 🆕 |
| SALARIED EXEMPTIONS | ||
| Education Allowance | ₹100/month/child | ₹3,000/month/child 🆕 (30×) |
| Hostel Allowance | ₹300/month/child | ₹9,000/month/child 🆕 (30×) |
| Meal Vouchers | ₹50/meal | ₹200/meal 🆕 |
| Corporate Gifts (non-cash, employer) | ₹5,000/year | ₹15,000/year 🆕 |
| REAL ESTATE & HRA | ||
| 50% HRA Exemption Cities | Delhi, Mumbai, Kolkata, Chennai | + Bengaluru, Pune, Hyderabad, Ahmedabad 🆕 |
| Rent-free Accommodation (taxable value) | Tiered by city population | Standardised 10% of salary 🆕 |
| INVESTMENTS & MARKETS | ||
| STT on Futures | 0.02% | 0.05% 🆕 |
| STT on Options | 0.1% | 0.15% 🆕 |
| SGB Secondary Market Gains | Exempt | 12.5% LTCG above ₹1.25L 🆕 |
| Share Buyback Taxation | Taxed at company level | Capital gains in shareholder's hands 🆕 |
| COMPLIANCE & FILING | ||
| ITR Deadline (non-audit business) | July 31 | August 31 🆕 |
| Revised Return Deadline | December 31 of AY | 12 months after tax year end 🆕 |
| TCS on LRS Remittances | 5% / 20% (complex slabs) | Flat 2% uniform 🆕 |
New Regime Tax Slabs — FY 2025-26 (Budget 2025)
| Taxable Income | Tax Rate | Tax on Slab |
|---|---|---|
| Up to ₹4,00,000 | 0% | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% | Up to ₹20,000 |
| ₹8,00,001 – ₹12,00,000 | 10% | Up to ₹40,000 |
| ₹12,00,001 – ₹16,00,000 | 15% | Up to ₹60,000 |
| ₹16,00,001 – ₹20,00,000 | 20% | Up to ₹80,000 |
| ₹20,00,001 – ₹24,00,000 | 25% | Up to ₹1,00,000 |
| Above ₹24,00,000 | 30% | 30% on excess |
Key FY2025-26 highlights: Standard deduction ₹75,000 · Section 87A rebate ₹60,000 (zero tax up to ₹12.75L income) · No tax on income up to ₹12,75,000 after standard deduction and rebate.
Old Regime vs New Regime — Which is Better?
| Feature | New Regime | Old Regime |
|---|---|---|
| Standard Deduction | ₹75,000 | ₹50,000 |
| 80C Deduction | Not available | Up to ₹1,50,000 |
| HRA Exemption | Not available | Available |
| Home Loan Interest (24b) | Not available | Up to ₹2,00,000 |
| 87A Rebate limit | ₹12,00,000 taxable | ₹5,00,000 taxable |
| Best For | Income below ₹15L or fewer deductions | High deductions (80C+HRA+Home loan) |
Surcharge on Income Tax
If your total income exceeds ₹50 lakh, a surcharge is levied on the income tax (not on income). The surcharge rates are: 10% for income ₹50L–₹1Cr; 15% for ₹1Cr–₹2Cr; 25% for ₹2Cr–₹5Cr; 25% (new regime) or 37% (old regime) above ₹5Cr. Additionally, a 4% Health & Education Cess is applied on (tax + surcharge).
How to Save Income Tax Legally in India (FY 2025-26)
- Choose the right regime first: Use the calculator above to compare both regimes for your specific income and deductions before deciding.
- Section 80C — up to ₹1.5L (Old Regime): PPF, ELSS, EPF, 5-year FD, NSC. Saves ₹46,800/year at 30% slab.
- Section 80D — Health insurance: ₹25,000/year for self/family (₹50,000 for senior citizens) + ₹25,000–₹50,000 for parents' insurance.
- Section 80CCD(1B) — NPS: Extra ₹50,000 deduction beyond the ₹1.5L 80C limit. Employer NPS contribution deductible even under the New Regime.
- HRA exemption (Old Regime): Use our HRA Calculator for your exact exempt amount.
Section 80C — Complete List of Eligible Deductions
Maximum deduction: ₹1.5 lakh per year. Available under Old Regime only.
| Investment | Lock-in | Returns | Tax on Returns |
|---|---|---|---|
| ELSS Mutual Funds | 3 years | 12–18% (market) | LTCG 12.5% above ₹1.25L |
| PPF | 15 years | 7.1% | Fully tax-free (EEE) |
| EPF (Employee PF) | Till retirement | 8.25% | Tax-free if service > 5 yrs |
| 5-Year Tax Saving FD | 5 years | 6.5–7.5% | Taxable at slab rate |
| NSC | 5 years | 7.7% | Taxable at slab rate |
| Life insurance premium | — | Varies | Exempt u/s 10(10D) if conditions met |