India's income tax system offers two regimes — the Old Regime (with exemptions and deductions) and the New Regime (lower slab rates, fewer deductions). The right choice depends on your level of deductions. Our Income Tax Calculator computes your liability under both regimes for FY 2025-26 (AY 2026-27) so you can make an informed decision and minimise your tax outgo.
Old Regime vs New Regime — Key Differences
The Old Regime allows over 70 exemptions including HRA, LTA, 80C (up to ₹1.5L), 80D (health insurance), and home loan interest. The New Regime has simpler slabs: 0% up to ₹3L, 5% (₹3–7L), 10% (₹7–10L), 15% (₹10–12L), 20% (₹12–15L), and 30% above ₹15L — with a ₹75,000 standard deduction and full Section 87A rebate for income up to ₹7 lakh.
Who Benefits More From Each Regime?
The New Regime is better if your total deductions are less than ~₹3.75 lakh. If you claim significant 80C investments, HRA exemption, home loan deductions, and 80D premiums, the Old Regime may yield lower tax. Salaried individuals with home loans and large 80C investments generally benefit from the Old Regime; others benefit from the New Regime.
Surcharge and Health & Education Cess
A Health and Education Cess of 4% is applied on the total tax. Additionally, a surcharge applies if your total income exceeds ₹50 lakh: 10% surcharge (₹50L–1Cr), 15% (₹1–2Cr), 25% (₹2–5Cr), and 37% above ₹5Cr (capped at 25% under the New Regime).
Frequently Asked Questions
Which tax regime is better for salaried employees in FY 2025-26?
The New Regime is now the default. For most employees without a home loan and with limited deductions, the New Regime with its ₹7L rebate and ₹75,000 standard deduction works out cheaper. Employees with significant deductions should calculate both regimes to compare.
Can I switch between Old and New Regime every year?
Salaried individuals (without business income) can switch regimes every year at the time of filing their ITR. Business owners can switch only once and cannot revert if they choose the New Regime.
What is the Section 87A rebate?
Section 87A provides full tax rebate (zero tax) if your taxable income is up to ₹5 lakh (Old Regime) or ₹7 lakh (New Regime). The rebate is capped at your actual tax liability.
What is the income tax filing deadline?
For individuals (non-audit), the ITR deadline is July 31 of the assessment year. For FY 2025-26 income (AY 2026-27), the deadline is July 31, 2026. Late filing attracts a ₹5,000 penalty (₹1,000 if income is below ₹5 lakh).
Is agricultural income taxable in India?
Agricultural income is exempt from income tax. However, it is included for rate-determination purposes if your non-agricultural income also exceeds the basic exemption limit (partial integration rule).