Which regime is better: New or Old?

For most taxpayers without heavy deductions (home loan interest, 80C, 80D), the New Tax Regime offers lower slab rates and higher rebate limits. If you have deductions exceeding ₹3.75 to ₹4 Lakhs, the Old Regime may be beneficial.

What is Health & Education Cess in India?

A mandatory 4% cess is levied on the total income tax amount payable across all tax regimes.

Finance

Income Tax Calculator

Compare Income Tax liability under New Tax Regime vs Old Tax Regime for FY 2024-25 and FY 2025-26 with standard deduction and 87A rebate.

Financial Year:

Gross Annual Income (₹)

₹

Total Estimated Tax Payable (NEW REGIME)

₹71,500

Effective Tax Rate: 5.96% of gross income

Standard Deduction:₹75,000

Net Taxable Income:₹11,25,000

Tax Before Rebate:₹68,750

Health & Education Cess (4%):₹2,750

Under Old Regime, estimated tax would be ₹91,000.You save ₹19,500 with new regime.

Indian Income Tax Slabs & Regime Comparison (FY 2024-25 & FY 2025-26)

Calculates tax liability comparing the New Tax Regime (Section 115BAC) against the Old Tax Regime, incorporating the ₹75,000 standard deduction, Section 87A full rebate up to ₹7 Lakhs, and 4% Health & Education Cess.

New Regime Slabs: 0-3L: Nil | 3-7L: 5% | 7-10L: 10% | 10-12L: 15% | 12-15L: 20% | >15L: 30% + 4% Cess (Rebate u/s 87A if taxable income <= ₹7,00,000)

Calculation Steps

1Calculate Gross Total Income from salary, business, interest, and other sources.
2Apply statutory standard deduction (₹75,000 for salaried in New Regime, ₹50,000 in Old Regime).
3For Old Regime, deduct eligible Section 80C, 80D, and HRA exemptions.
4Calculate tax on each slab bracket.
5Apply Section 87A rebate (zero tax if net taxable income is up to ₹7,00,000 in New Regime or ₹5,00,000 in Old Regime).
6Add 4% Health and Education Cess to net tax.

Practical Example

Scenario: Salaried employee earning ₹9,00,000 annual income under New Tax Regime

Inputs: Gross Salary: ₹9,00,000 | Standard Deduction: ₹75,000 | Taxable Income: ₹8,25,000

Calculation: Slab 0-3L: ₹0 | 3-7L: ₹20,000 | 7-8.25L: ₹12,500 | Base Tax: ₹32,500 | Cess (4%): ₹1,300

Result: Total Income Tax: ₹33,800 | Net Effective Tax Rate: 3.76%

Assumptions & Disclaimers

Key Assumptions:

Salaried individuals receive standard deduction of ₹75,000 under New Tax Regime as per Finance Act.
Section 87A rebate provides full tax waiver for taxable income up to ₹7,00,000 in New Regime.

Tax calculations are indicative simulations. Consult a qualified Chartered Accountant (CA) or certified tax advisor for official tax filing and complex deductions.

Frequently Asked Questions

With the standard deduction of ₹75,000 and Section 87A rebate up to ₹7,00,000 taxable income, salaried individuals earning up to ₹7,75,000 pay zero income tax.