Income Tax in India — New vs Old Regime Explained
India has two income tax regimes as of FY 2025-26: the New Tax Regime (default) with lower slab rates but fewer deductions, and the Old Tax Regime with higher rates but comprehensive deductions. Choosing the right one can save you lakhs.
Union Budget 2025 — Key Tax Changes
- New Regime is now the default regime for all taxpayers.
- Zero tax up to ₹12 lakh income under the New Regime (after rebate u/s 87A).
- Standard deduction increased to ₹75,000 under the New Regime.
- New tax slabs introduced: 5% (₹4–8L), 10% (₹8–12L), 15% (₹12–16L), 20% (₹16–20L), 25% (₹20–24L), 30% (above ₹24L).
- Surcharge capped at 25% for all income levels under New Regime.
New Tax Regime Slabs — FY 2025-26
| Income Range | Tax Rate (New Regime) |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
How to Use This Calculator
- Enter your annual salary/CTC and any other income sources.
- Switch between New and Old regime using the toggle at the top.
- For Old Regime: enter your eligible deductions (80C, 80D, NPS, etc.).
- The calculator instantly shows your total tax, effective rate, and breakdown.
- Compare both regimes to decide which saves you more tax.
How Tax is Calculated
- Gross Income = Salary + Other Income + Interest + Rental Income
- Net Taxable Income = Gross Income – Standard Deduction – Eligible Deductions
- Base Tax is computed as per the applicable slab rates.
- Surcharge is added if income exceeds ₹50 lakh.
- Health & Education Cess of 4% is added on (Base Tax + Surcharge).
- Total Tax Payable = Base Tax + Surcharge + Cess
Example: Salary of ₹18 Lakh — New Regime
Here's how tax is calculated for a salaried individual with ₹18 lakh CTC under the New Tax Regime for FY 2025-26:
Gross Salary₹18,00,000
Standard Deduction– ₹75,000
Net Taxable Income₹17,25,000
Tax Breakdown
₹0 – ₹4L (0%)₹0
₹4L – ₹8L (5%)₹20,000
₹8L – ₹12L (10%)₹40,000
₹12L – ₹16L (15%)₹60,000
₹16L – ₹17.25L (20%)₹25,000
Cess @ 4% ₹5,800
Total Tax ₹1,50,800
New Regime vs Old Regime — When to Choose What
- Choose New Regime: if your deductions are less than ₹3.75 lakh — the new regime will save you more tax.
- Choose Old Regime: if you have high 80C investments, HRA, home loan interest, and NPS contributions totalling ₹3.75L+.
- Salaried employees: can switch regime every year at the time of filing ITR.
- Business owners: can switch only once from Old to New Regime.
- Senior Citizens: Old Regime may be better due to higher exemption limit (₹3L for 60+, ₹5L for 80+).
- Zero Tax up to ₹12L: New Regime offers full rebate u/s 87A for income up to ₹12 lakh.