Income Tax Calculator India

Old Regime: Lower tax slabs (0%, 5%, 20%, 30%) BUT requires investments/expenses for deductions (80C, 80D, HRA, etc.). Example: ₹10L income - ₹2L deductions = ₹8L taxable = ₹55k tax (with planning). New Regime: Higher tax-free limit (₹3L vs ₹2.5L), simplified slabs (0%, 5%, 10%, 15%, 20%, 30%) BUT NO deductions (except standard deduction ₹50k and employer NPS). Example: Same ₹10L income = ₹10L taxable = ₹75k tax (less planning needed). WHO SHOULD CHOOSE: Old Regime = If you invest ₹1.5L+ in 80C, pay rent (HRA), have home loan (24(b)), buy health insurance. New Regime = If no major investments, want simplicity, or lower income (under ₹7L). FY 2025-26 Update: New regime is DEFAULT (must opt for old if beneficial).

Section 80C: Max ₹1.5L deduction from taxable income. Eligible Investments: (1) ELSS Mutual Funds (3-year lock-in, 12-15% returns), (2) PPF (15-year lock-in, 7.1% returns, tax-free), (3) EPF (automatic from salary, 8.15% returns), (4) Life Insurance Premium (term/traditional, NOT ULIP premium portion), (5) NSC, (6) Tax-Saver FDs (5-year lock-in, 6.5% returns), (7) Home Loan Principal repayment, (8) Tuition Fees (children education), (9) Sukanya Samriddhi (girl child, 8% returns). Tax Saving: ₹1.5L deduction at 30% bracket = ₹46,500 saved (31% with cess). CRITICAL: EPF + ELSS combination best (EPF ₹50k auto + ELSS ₹1L for growth). Avoid LIC traditional plans (poor returns).

HRA Exemption = Minimum of: (1) Actual HRA received, (2) 50% of Basic (metro) or 40% (non-metro), (3) Rent paid - 10% of Basic. Example: Basic ₹50k/month (₹6L/year), HRA received ₹20k/month (₹2.4L/year), Rent paid ₹18k/month (₹2.16L/year), Metro city. Calculate: (1) Actual HRA = ₹2.4L, (2) 50% of Basic = ₹3L, (3) Rent - 10% Basic = ₹2.16L - ₹0.6L = ₹1.56L. Exemption = Minimum = ₹1.56L (saves ₹48k tax at 30% bracket). CRITICAL: Only available in Old Regime, NOT New Regime. Keep rent receipts (for ₹1L+ rent, landlord PAN required). Living with parents? Pay them rent, get receipts (legitimate if actual rent paid, they declare as income).

Standard Deduction = Flat ₹50,000 deduction for all salaried employees, NO investment/proof needed. FY 2025-26: Available in BOTH Old and New Regime. Old Regime: ₹50k (was increased from ₹40k). New Regime: ₹50k. Tax Saving: ₹50k at 30% bracket = ₹15,500 saved. Pensioners: Also get ₹50k standard deduction (same as salaried). CRITICAL: Automatic deduction, applies to gross salary before calculating tax. Combined with other deductions: Standard ₹50k + 80C ₹1.5L + 80D ₹25k = ₹2.25L total deductions possible (in old regime). New regime users ONLY get standard ₹50k (no 80C/80D).

Section 80D: Deduction for health insurance premiums. Limits: (1) Self + spouse + children (under 60): ₹25,000, (2) Parents (under 60): ₹25,000 additional, (3) Parents (60+ senior citizen): ₹50,000 additional. Maximum = ₹25k (self) + ₹50k (senior parents) = ₹75,000 total deduction. Example: You pay ₹15k premium (self + spouse), ₹40k premium (parents 65 years), Total deduction = ₹15k + ₹40k = ₹55k (saves ₹17k tax at 30%). CRITICAL: (1) Preventive health checkups (₹5k within ₹25k limit), (2) Parents must be your dependent, (3) Payment via cash NOT allowed (use bank/card), (4) ONLY in Old Regime (not available in New Regime). Combine with 80C for maximum tax saving.

TDS = Employer deducts estimated annual tax monthly from salary. Process: (1) Employer asks for investment declarations (80C, 80D, HRA proofs), (2) Calculates annual tax based on inputs, (3) Divides by 12 months, deducts monthly. Example: Annual salary ₹12L, declared 80C ₹1.5L, 80D ₹25k, HRA ₹2L. Taxable = ₹12L - ₹0.5L (std) - ₹1.5L - ₹25k - ₹2L = ₹7.25L. Tax = ₹67,500. Monthly TDS = ₹67,500 / 12 = ₹5,625 deducted. CRITICAL: (1) Submit proofs by Jan-Feb (or TDS increases), (2) If actual investments less than declared → Pay extra tax in ITR filing, (3) Form 16 = TDS certificate from employer (file ITR with this), (4) Excess TDS = Refund after ITR filing (takes 2-4 months).

Marginal Rate = Tax rate on LAST RUPEE earned (your highest slab). Effective Rate = Total tax ÷ Total income (actual % you pay). Example: ₹15L income, New Regime FY 2025-26. Tax calculation: 0-3L → ₹0, 3-6L → 5% = ₹15k, 6-9L → 10% = ₹30k, 9-12L → 15% = ₹45k, 12-15L → 20% = ₹60k. Total tax = ₹1.5L. Marginal Rate = 20% (last ₹3L taxed at 20%). Effective Rate = ₹1.5L / ₹15L = 10%. WHY IT MATTERS: Bonus of ₹1L will be taxed at 20% (marginal), NOT 10% (effective). Deductions save tax at marginal rate (₹1.5L 80C saves ₹46,500 at 30% bracket). Use Effective Rate to compare with peers, Marginal for planning additional income.

Due Dates: (1) Salaried + No audit: July 31, 2026 (for FY 2025-26), (2) Business/Profession: October 31, 2026. Late filing: Up to Dec 31, 2026 (penalty ₹1k if income under ₹5L, ₹5k if above). Form Selection: ITR-1 (Sahaj): Salary + One house property + Interest income under ₹50L. ITR-2: Multiple house properties, capital gains, foreign income. ITR-3: Business/Profession income. ITR-4 (Sugam): Presumptive business (under ₹3Cr turnover). 95% salaried use ITR-1. CRITICAL: File even if no tax due (TDS refund, loan applications, visa processing). E-verify within 30 days (Aadhaar OTP/net banking), else ITR invalid. Keep Form 16, 26AS, AIS ready before filing.

10-Point Tax Optimization Checklist: (1) Max out 80C ₹1.5L (ELSS + EPF combo), (2) Health Insurance 80D ₹75k (self + senior parents), (3) NPS 80CCD(1B) additional ₹50k (on top of 80C), (4) HRA + Rent receipts (if renting), (5) Home Loan interest 24(b) up to ₹2L, (6) Standard deduction ₹50k (automatic), (7) Professional Tax ₹2.5k (auto-deducted, shows in Form 16), (8) Mediclaim for parents (80D senior citizen ₹50k), (9) Interest on education loan (unlimited, no cap), (10) Donations 80G (50-100% deduction). MAXIMUM POSSIBLE: 80C ₹1.5L + 80D ₹75k + NPS ₹50k + HRA ₹2L + Home loan ₹2L + Std ₹50k = ₹6.25L deductions. ₹15L income - ₹6.25L = ₹8.75L taxable (vs ₹15L = huge tax saving). Choose regime accordingly: Such deductions → Old Regime better.