How to use the income tax calculator
- Enter your Annual gross income before any deductions.
- Choose a Tax regime. The new regime is the default; the old regime allows more deductions.
- If you picked the old regime, enter your Deductions — the common ones being 80C, 80D and home loan interest.
- Read the taxable income, the tax, the rebate and the cess that make up the final figure.
Worked example
An income of Rs 12,00,000 under the new regime gets a standard deduction of Rs 75,000, leaving Rs 11,25,000 taxable. Slab tax works out to Rs 68,750, and once the 4% health and education cess is added the total comes to about Rs 71,500 — an effective rate near 6.0% of gross income.
How Indian income tax is built up
Four steps turn gross income into a tax bill.
- Exemptions and deductions. Salaried taxpayers get a standard deduction — Rs 75,000 under the new regime, Rs 50,000 under the old — plus any Chapter VI-A deductions the old regime allows.
- Slab rates. Each band is taxed at its own rate, not the whole income at the top rate. This is why a higher slab does not mean a cliff edge.
- Section 87A rebate. Small taxpayers get the liability rebated: up to Rs 25,000 under the new regime where taxable income is Rs 7,00,000 or less, and up to Rs 12,500 under the old regime where it is Rs 5,00,000 or less.
- Health and education cess. 4% added on top of the tax after the rebate.
Tax = (slab tax minus 87A rebate), then multiplied by 1.04 for cess
New regime versus old regime
The new regime offers wider slabs and a larger standard deduction but strips out most exemptions. The old regime keeps 80C, 80D, HRA, home loan interest and more, at the price of narrower slabs.
- The new regime usually wins for people with few deductions and straightforward salary income.
- The old regime can win when deductions are large — a home loan, substantial 80C investments, or HRA in a high-rent city.
- Run both. The gap is often only a few thousand rupees, and the decision is made at the start of the year, not at filing time.
Practical notes
- Rates and limits change with each Union Budget. This calculator reflects FY 2024-25 rules — verify against the current Finance Act.
- Surcharge is not included. Very high incomes attract an additional surcharge on top of the cess, with marginal relief.
- The salaried standard deduction is applied automatically — do not enter it again in the deductions field.
- Take-home is shown before professional tax and other state levies.