What is the old tax regime?
The old tax regime is the long-standing structure of Indian personal income tax. Its slab rates are higher — 5%, 20% and 30% for an individual below 60 — but it rewards taxpayers who invest and spend in specific ways. Provident fund contributions, ELSS mutual funds, life-insurance premiums, home-loan principal (all within the ₹1.5 lakh Section 80C ceiling), health-insurance premiums under Section 80D, home-loan interest under Section 24(b), education-loan interest under Section 80E and exempt allowances such as HRA all reduce the income on which tax is finally charged. A disciplined saver with a home loan and family health cover can often shrink a large salary into a much smaller taxable figure.
What is the new tax regime?
The new tax regime trades deductions for lower rates. Income is spread across more slabs — starting at nil up to ₹4,00,000 and rising in 5% steps to 30% above ₹24,00,000 for FY 2026–27 — and a much larger Section 87A rebate means resident individuals with taxable income up to ₹12,00,000 pay no tax at all. In exchange, almost every classic deduction disappears: no 80C, no 80D, no HRA. Salaried taxpayers keep a standard deduction of ₹75,000 and the employer's NPS contribution remains deductible, but very little else.
Key differences between the regimes
The choice comes down to a simple trade: the old regime charges more per slab but lets you subtract more first; the new regime charges less per slab but taxes nearly everything you earn. The new regime is also the default — you must actively opt for the old one. Someone who claims only the standard deduction will almost always pay less under the new regime. Someone who genuinely uses ₹4–5 lakh of deductions each year — a home loan, full 80C, NPS top-up and family health insurance — may still find the old regime cheaper. That is exactly the comparison this calculator performs.
Why deductions decide the comparison
Every rupee of eligible deduction removes a rupee from your highest slab. If your top slab under the old regime is 30%, a ₹1,00,000 deduction saves about ₹31,200 including cess. Add enough of these savings and the old regime's higher rates are overcome. Because the new regime blocks most deductions, the break-even point depends almost entirely on the total you can legitimately claim — which is why the calculator asks for each deduction separately and caps every field at its legal limit.
How progressive tax slabs work
India uses progressive slabs: each rate applies only to the income falling inside its own band, never to the whole amount. If your taxable income is ₹13,00,000 under the new regime, the first ₹4,00,000 is tax-free, the next ₹4,00,000 is taxed at 5%, the next ₹4,00,000 at 10% and only the last ₹1,00,000 at 15%. Crossing a slab boundary by one rupee therefore never causes a sudden jump in tax — the higher rate touches only that extra rupee. The expandable slab tables under the results show precisely how much of your income landed in each band.
What is taxable income?
Taxable income is what remains after every eligible reduction: gross salary and pension, house-property income and interest income are added together; exempt allowances, professional tax, the standard deduction and Chapter VI-A deductions are then subtracted. Tax slabs are applied to this final figure — not to your CTC and not to your gross salary. Two people with identical salaries can have very different taxable incomes purely because of how much they invest, insure and borrow.
Rebate, surcharge and cess explained
The Section 87A rebate cancels the computed tax for resident individuals whose taxable income stays within a threshold — ₹12,00,000 in the new regime for FY 2026–27, with marginal relief so that earning slightly more than the threshold can never cost you more in tax than the extra income itself. A surcharge is an additional percentage applied to the tax (not the income) of high earners, starting above ₹50 lakh, with its own marginal relief at each threshold and a 25% cap in the new regime. Finally the 4% Health and Education Cess is added to the tax-plus-surcharge total. The order matters: slab tax first, then rebate, then surcharge, then cess — and the calculator follows exactly that order.
Why the lowest result may not decide your filing choice
The regime with the lower estimate here is not automatically the right filing choice. Special-rate income such as capital gains changes the picture; business owners face restrictions on switching regimes; some deductions require proofs, lock-ins or payment deadlines; and employer TDS elections, loss set-offs and carried-forward losses can all shift the outcome. Treat this comparison as a starting point for a conversation with a qualified tax professional, not as the final answer.
Limitations of this calculator
Version 1 handles normal slab-rate income for resident individuals only. It does not compute capital gains, lottery or virtual-digital-asset tax, non-resident rules, AMT, relief under Section 89, or category-specific surcharge caps on special-rate income. Deduction limits are applied at their general ceilings; some sections have finer sub-limits that depend on personal facts. Rounding conventions in the final return may also differ slightly. Where your situation involves any of these, verify the numbers with official Income Tax Department resources or a professional.
Frequently asked questions
What is the difference between the old and new tax regimes?
The old regime has higher slab rates but allows a wide set of deductions and exemptions — Section 80C investments, health-insurance premiums under 80D, home-loan interest, HRA and more. The new regime offers lower slab rates and a larger rebate but permits only a small list of deductions, mainly the standard deduction and the employer's NPS contribution. Which one produces a lower tax depends almost entirely on how much you actually claim in deductions.
Which deductions are available under the old regime?
The most commonly used are: the standard deduction on salary, Section 80C (up to ₹1.5 lakh for PF, ELSS, PPF, life-insurance premiums and similar), Section 80CCD(1B) (an extra ₹50,000 for NPS), Section 80D (health-insurance premiums), Section 24(b) home-loan interest up to ₹2 lakh on a self-occupied house, Section 80E education-loan interest and Section 80G donations. Exempt allowances such as HRA and LTA also reduce taxable salary under the old regime.
Can salaried taxpayers switch tax regimes?
Yes. Salaried individuals without business income can generally choose their regime each year while filing the income-tax return, regardless of what they told their employer for TDS purposes. Taxpayers with business or professional income face restrictions on switching back after opting out of the new regime, so they should plan the choice more carefully.
Is the new tax regime the default regime?
Yes. The new regime is the default. If you want the old regime you must actively opt for it — salaried taxpayers do this while filing the return (and can tell their employer for TDS), while taxpayers with business income file a specific form to opt out.
Does this calculator include capital gains?
No. This calculator estimates tax on normal slab-rate income only — salary, pension, house property and interest-type income. Capital gains, lottery winnings, virtual digital assets and other income taxed at special rates are not included and need separate computation.
Does the calculator include surcharge and cess?
Yes. Surcharge is applied through configurable income thresholds with marginal relief at each threshold, and the 4% Health and Education Cess is added after tax, rebate and surcharge. The new regime's surcharge is capped at 25% as per the configured rules.
Why may the final ITR tax differ from this estimate?
Real returns can involve special-rate income, capital-gains set-offs, carried-forward losses, category-specific surcharge caps, exempt income, TDS/TCS credits, interest under sections 234A/B/C and rounding rules. This tool is a planning estimate, not a filing computation.
How often are the calculator rules updated?
Tax slabs, deduction limits, rebate, surcharge and cess live in a year-based configuration that is reviewed after each Union Budget and updated when rules change. The 'rules last reviewed' date is shown in the transparency section on this page.
This calculator is provided for general education and preliminary estimation only. It does not constitute tax, legal, accounting or investment advice. Tax laws and interpretations may change. Verify current rules through official Income Tax Department and Union Budget sources and consult a qualified tax professional before filing a return or making a financial decision.