Paying taxes is a duty, but paying extra tax due to lack of planning is a mistake. With the introduction of the New Tax Regime, Indian taxpayers are often confused: "Should I stick to the Old Regime with deductions, or switch to the New Regime with lower rates?"
Our Income Tax Calculator is designed to solve exactly this problem. It compares both regimes side-by-side and tells you where you save more money.
Table of Contents
1. Old Regime vs New Regime: The Main Difference
The choice depends entirely on your investments and expenses. Here is a simple breakdown:
High Tax Rates, But High Deductions.
- Best for people who have Home Loans, Life Insurance, and pay Rent.
- Allows Section 80C (₹1.5 Lakh), 80D (Health Insurance), and HRA exemptions.
- Complex to calculate but can save money for high investors.
Lower Tax Rates, But No Deductions.
- Default Regime for most taxpayers now.
- You CANNOT claim HRA, 80C, or Home Loan interest (for self-occupied).
- Simple: Just pay tax on what you earn.
- Standard Deduction (₹50,000 to ₹75,000) is now allowed.
2. Key Deductions Explained
If you choose the Old Regime, you must know these sections to reduce your taxable income:
- Standard Deduction: A flat deduction (e.g., ₹50,000) available to all salaried employees in both regimes.
- Section 80C (Max ₹1.5 Lakh): Includes EPF, PPF, LIC Premium, ELSS Mutual Funds, and Principal repayment of Home Loan.
- Section 80D (Health Insurance): Up to ₹25,000 for self and family, and extra for parents.
- Section 24(b) (Home Loan Interest): You can claim up to ₹2 Lakhs interest deduction if you own the house.
- HRA (House Rent Allowance): Exempts a portion of your salary if you live in a rented house.
3. Current Income Tax Slabs (FY 2025-26)
Note: Slabs are subject to change in every Union Budget. Below is a general representation of the New Regime.
| Income Range | Tax Rate (New Regime) |
|---|---|
| Up to ₹3 Lakhs | Nil (0%) |
| ₹3 Lakhs to ₹6 Lakhs | 5% |
| ₹6 Lakhs to ₹9 Lakhs | 10% |
| ₹9 Lakhs to ₹12 Lakhs | 15% |
| ₹12 Lakhs to ₹15 Lakhs | 20% |
| Above ₹15 Lakhs | 30% |
*Under Section 87A, taxable income up to ₹7 Lakhs is effectively tax-free in the New Regime.
4. How to Use Our Tax Calculator?
Don't waste time on manual calculations. Follow these steps:
- Enter Income: Put your Gross Annual Salary (including bonuses).
- Enter Deductions (Optional): If you want to check the Old Regime, enter your 80C investments, HRA, and Medical Insurance amounts.
- Click Calculate: The tool will show two cards:
- Tax under Old Regime
- Tax under New Regime
- Result: It will highlight which regime saves you more money!
5. Smart Tax Planning Tips
Tax planning should start in April, not March.
- Utilize Section 80C fully: If you are in the Old Regime, ensure you max out the ₹1.5L limit via ELSS or PPF.
- NPS (National Pension System): You can claim an extra ₹50,000 deduction under Section 80CCD(1B) over and above the 80C limit.
- Health Insurance: Buying insurance not only protects your health but also reduces tax.