What is the Income Tax?
India's new tax regime is now the default. It offers wider slabs and lower rates but removes most deductions — no 80C, no HRA, no LTA. What it does allow is a ₹75,000 standard deduction for salaried taxpayers and the employer's NPS contribution under 80CCD(2).
The Section 87A rebate makes income up to ₹12 lakh effectively tax-free for residents (₹12.75 lakh for the salaried, once standard deduction is applied).
One limit of this calculator: it computes slab tax, the 87A rebate and 4% cess, but not surcharge. Surcharge starts once total income passes ₹50 lakh — 10% between ₹50 lakh and ₹1 crore, 15% from ₹1 crore to ₹2 crore and 25% above ₹2 crore under the new regime (the old regime goes to 37% above ₹5 crore), with marginal relief just past each threshold. If your income is above ₹50 lakh, treat the figure below as the tax before surcharge.
Formula & worked example
Tax is charged slab by slab, not on the whole income at one rate:
₹16–20L: 20% · ₹20–24L: 25% · above ₹24L: 30%
Total = (slab tax − 87A rebate) × 1.04
Worked example: ₹15,00,000 gross salary. Less ₹75,000 standard deduction = ₹14,25,000 taxable. Tax = 0 + ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750. No rebate applies above ₹12 lakh, so with 4% cess the total is about ₹97,500 — an effective rate of just 6.5% on gross.
How to use this income tax calculator
- Enter your annual gross including basic, HRA, bonus and allowances.
- Keep the ₹75,000 standard deduction if you are salaried; set it to 0 if not.
- Add employer NPS (80CCD(2)) under other deductions — it is still allowed in the new regime.
- Check the slab table to see exactly where your income is being taxed.
Smart tips
- Income up to ₹12.75 lakh is effectively tax-free for salaried people under the new regime — the 87A rebate wipes out the liability.
- Only the income above each threshold is taxed at that rate. Crossing a slab never reduces your take-home.
- Employer NPS contribution up to 14% of basic is deductible even in the new regime — one of the few remaining levers.
- If you claim large HRA, home loan interest and 80C, run the old regime too before choosing.
Frequently asked questions
Is income up to ₹12 lakh really tax-free?
For residents, yes. The Section 87A rebate of up to ₹60,000 cancels the tax on taxable income up to ₹12 lakh. Salaried taxpayers get the ₹75,000 standard deduction on top, so ₹12.75 lakh gross is effectively tax-free.
Which regime should I choose?
The new regime suits most people without large deductions. If your 80C, HRA and home loan interest together exceed roughly ₹4–4.5 lakh, the old regime may still win.
Can I claim 80C in the new regime?
No. Section 80C, 80D, HRA and LTA are not available. Only the standard deduction and employer NPS under 80CCD(2) survive.
What is the 4% cess?
Health and Education Cess, charged at 4% on income tax plus surcharge, after any rebate. It applies in both regimes.
Does this include surcharge?
No. Surcharge applies only above ₹50 lakh of total income — 10%, 15% and 25% at the ₹50 lakh, ₹1 crore and ₹2 crore marks in the new regime, with marginal relief immediately past each threshold. Below ₹50 lakh there is no surcharge and this calculation is complete.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: Income Tax Department — slab rates, s.87A rebate, surcharge and 4% cess, AY 2026-27 (page updated 9 Jul 2026). How we check these numbers.