Introduction

The income tax calculator is a quick and easy-to-use online tool that can be found on the official website of the Income Tax Department as well as on other third-party websites.

The tax calculator can be used to get an estimate of the taxes you pay based on your taxable income and your deductible investment and expenses. However, your taxable income determination will also be subject to new changes that may be presented in the Union Budget in India each year. Therefore, while using the tax calculator, it is important to choose the correct financial year for which you want to file your taxes.

An important feature of the income tax calculator is that the tool will consider your age, income, expenses, investments, the interest paid on your home loans, and various other details to give you the results. Moreover, it also generates the estimate of the income tax payable based on the tax regime (old or new) as well as the tax slab of the taxpayer.

How to Calculate Income Tax for FY 2025-26 Onwards?

Under this revised structure, individuals with an annual income up to ₹12 lakh (₹12.75 lakh for salaried taxpayers after accounting for the standard deduction) will not be liable to pay income tax. ​

It's important to note that taxpayers opting for the new tax regime cannot avail of exemptions and deductions such as House Rent Allowance (HRA) and those under Section 80C of the Income Tax Act. However, the increased standard deduction aims to provide relief to salaried individuals by reducing their taxable income.​

For those who choose to remain under the old tax regime, existing exemptions and deductions continue to apply, including:​

• HRA Exemption: Available for individuals living on rent and receiving HRA as part of their salary.​

• Section 80C Deductions: Allows deductions up to ₹1.5 lakh for specified investments and expenses.​

• Section 24B Deductions: Permits deduction of up to ₹2 lakh on interest paid for a home loan.

If a taxpayer opts for the new tax regime, they cannot avail of these exemptions and deductions.

For instance, if an individual has a basic salary of ₹1,00,000 per month and an HRA of ₹50,000, a Special Allowance of ₹21,000 per month, and an LTA (Leave Travel Allowance) of ₹20,000 annually. 

Individuals' taxable income differs under the old and new tax regimes due to exemptions and deductions.

• Old Tax Regime:

  • Taxable Income: ₹16,59,500 (after HRA exemption, standard deduction, and professional tax).

  • Benefit: Allows deductions like HRA and standard exemptions.

• New Tax Regime:

  • Taxable Income: ₹19,97,000 (only a ₹75,000 standard deduction applies).

  • Benefit: Simplified tax slabs but no exemptions like HRA.

While the new regime offers a streamlined approach, the old regime may still be beneficial for those eligible for deductions. Thus, one should compare all available options before filing taxes.

To be able to calculate her income tax, she needs to include her income from all the sources:

• Income from Salary 

• Income from house property 

• Income from capital gains

• Income from business/profession

• Income from other sources (interest from saving account interest income, etc.)

• Under the new tax regime for the financial year 2025-26, ABC earns an income of ₹8,000 from the interest on her savings account and ₹12,000 from her fixed deposit during the financial year. ABC has also invested ₹50,000 in a PPF, ₹20,000 in an ELSS, ₹8,000 in a life insurance premium, and ₹12,000 in a medical insurance premium. However, under the new tax regime, most deductions, including those under Sections 80C, 80CCD(1B), 80D, and 80TTA, are not applicable. Instead, ABC can benefit from a standard deduction of ₹75,000.

• ​Under the new tax regime for the financial year 2025-26, most deductions available under the old regime, such as those under Sections 80C, 80CCD(1B), 80D, and 80TTA, are not applicable. However, the new regime offers a higher basic exemption limit and a standard deduction.

Income Tax Deductions and Exemptions for Salaried Individuals

Income Tax Deduction Section List

The Income Tax Act of 1961 contains several clauses that allow you to deduct your taxable amount. When electronically filing income tax returns, deductions must be noted on the relevant ITR form.

Section 80C: 

Only individuals and HUF are eligible for deductions under this section. This clause exempts up to Rs. 1.5 lakh in expenses and certain investments, such as NSC, from taxes.

Section 80CCC: 

Payments paid to LIC or any other authorised insurance provider under a valid pension plan are subject to deductions under this section. The pension plan must be taken out of the individual's taxable income and be up to Rs. 1.5 lakh.

Section 80CCD: 

Both the employer and the taxpayer may deduct contributions to the New Pension Scheme under this provision. The contribution and the deduction are equal, and they don't exceed 10% of his pay. A total of Rs. 1.5 lakh can be deducted under Sections 80C, 80CCC, and 80CCD. Nevertheless, the Rs. 1.5 lakh cap does not include payments made to the Notified Pension Scheme under Section 80CCD.

Section 80D

Income tax deductions for paid health insurance premiums are covered under Section 80D. Individuals can get insurance coverage that will cover them, their spouse, dependent children, and their parents, whether or not they are dependents, for up to Rs. 15,000.

If the insured is a senior person, there is an extra Rs. 5,000 deductible. Any member may be insured under HUF, and there would be a general deduction of up to Rs. 15,000 plus an additional Rs. 5,000 deductions. Regardless of whether the assessee is an individual or a HUF, a total deduction of Rs. 2.0 lakh may be claimed.

Section 80DDB: 

This section covers medical expenses incurred by the assessee, a family member, or any member of a HUF to treat an illness or ailment as defined by the rules (11DD).

Section 80E:

Interest paid on student loans for education in India is eligible for deductions under this clause.

Section 80EE:

This provision addresses first-time homeowner tax savings. People who buy their first property for less than Rs. 40 lakh and take out loans for less than Rs. 25 lakh are covered by Section 80EE.

Section 80RRB: 

This section allows for the claim of deductions for income received from royalties or patents. For patents registered under the Patents Act of 1970, income tax savings of up to Rs. 3.0 lakh are possible.

The tax savings that apply to interest generated in savings bank accounts, post offices, or cooperative organisations are covered under Section 80TTA. A deduction of up to Rs. 10,000 can be claimed by individuals and HUFs on interest income.

Section 80U: 

When a disabled person presents their disability certificate, they are eligible for a flat income tax reduction. According to the degree of the handicap, up to Rs. 1.0 lakh may be exempt from taxes.

Section 24

Interest paid on tax-exempt housing loans is covered in this section. In addition to the deductions allowed by Sections 80C, 80CCF, and 80D, an annual deduction of up to Rs. 2.0 lakh may be claimed. Only self-occupied properties are covered by this. Tax exemptions are available for properties that are rented out, 30% of rent received, and paid municipal taxes.

Benefits of Filing Income Tax Online
 

If you earn more than the basic exemption limit, you will have to file your income tax returns. And an online IT calculator can help you understand how much income tax you should pay. Also, those who have a taxable income of less than the exemption limit can file a nil return. These are the benefits of filing your income tax returns online:

• The entire e-filing process is quick and can be carried out at your convenience.
• The transfer of refunds online takes place faster during e-filing.
• The confirmation of and the updates on your ITR status are prompt.
• The online tax returns filing process is secure since none of your private or financial details will be stored.
• The ITR statement can be presented as proof of income and proof of address when applying for a visa, loan, or life insurance plan.
• Since e-filing your returns is quick and easy, you can carry out the process yourself and avoid late fees and penalties.

Eligibility Criteria to File Income Tax Returns
 

The Income Tax Act states that only people or companies who are in specific income brackets are required to pay income tax. The following lists the organisations or companies that must file their ITRs in India:

Everyone who earns more than Rs 2.5 lakh in a fiscal year, up to the age of 59. The maximum rises to Rs. 3 lakh for senior persons (60–79 years old) and Rs. 5 lakh for super senior citizens (80 years and above). Remember to enter your gross income before using Section 10 exemptions and Sections 80C–80U deductions when using an income tax calculator. This guarantees precise tax computations based on your entire income. 

You can check out the highlights of the Union Budget 2025 to stay updated on key policy changes and financial allocations.