Income Tax Calculator (AY 2025-26)

Q: What is the standard deduction for salaried employees?

Under the Old Regime: ₹50,000. Under the New Regime: ₹75,000 (as per AY 2025-26, Budget 2024).

Q: What is Section 87A rebate?

Under the Old Regime, if your taxable income is ≤ ₹5 Lakhs, the tax is fully rebated (zero tax). Under the New Regime, the rebate applies up to ₹7 Lakhs of taxable income.

Q: What is marginal relief in income tax?

If your income exceeds ₹5L (old) or ₹7L (new) by a small amount, you don't necessarily lose the full rebate. Marginal relief ensures you don't pay more tax than the income exceeding the threshold.

Q: What is surcharge on income tax?

Surcharge is an additional tax on income above ₹50 Lakhs. At ₹50L–₹1Cr, it's 10%. Above ₹1Cr, it's 15%, and so on. The surcharge is calculated on your base income tax.

Q: What is Health and Education Cess?

A cess of 4% is levied on income tax + surcharge for all taxpayers. This goes to the PM's health and education fund.

Q: Can I switch between Old and New Tax Regime every year?

Salaried employees can switch every year while filing ITR. However, if you have business income, you can only switch once from Old to New (and once back).

Q: What deductions are available in the Old Regime?

80C (PPF, ELSS, LIC, PF, home loan principal) up to ₹1.5L, 80D (health insurance) up to ₹25K, HRA exemption, LTA, NPS (80CCD 1B) up to ₹50K, and home loan interest up to ₹2L.

Q: What deductions are NOT available in the New Tax Regime?

Most deductions including 80C, 80D, HRA exemption, LTA, and home loan interest are not available. Only standard deduction (₹75K) and employer NPS contribution (80CCD 2) are allowed.

Question 1

What is the difference between Old and New Tax Regime?

Answer

The Old Regime allows deductions (80C, 80D, HRA, etc.) but has higher base rates. The New Regime offers lower slab rates but no deductions except the ₹75,000 standard deduction.

Question 2

Which tax regime is better for me?

Answer

If your total deductions (80C + 80D + HRA + NPS) exceed ₹3–4 Lakhs, the Old Regime usually saves more. Otherwise, the New Regime is typically better.

Question 3

What is the standard deduction for salaried employees?

Answer

Old Regime: ₹50,000. New Regime: ₹75,000 (after Budget 2024, effective AY 2025-26).

Question 4

What is Section 87A rebate?

Answer

Old Regime: zero tax if taxable income ≤ ₹5L. New Regime: zero tax if taxable income ≤ ₹7L.

Question 5

What is surcharge on income tax?

Answer

Surcharge is levied above ₹50 Lakhs. At ₹50L–₹1Cr it's 10%, above ₹1Cr it's 15%.

Question 6

What is Health and Education Cess?

Answer

A 4% cess is applied on your income tax + surcharge for all taxpayers.

Question 7

Can I switch tax regime every year?

Answer

Salaried employees can switch every year while filing ITR. Business income earners can switch only once in each direction.

Question 8

What deductions are available in the Old Regime?

Answer

80C up to ₹1.5L, 80D up to ₹25K, HRA exemption, LTA, NPS 80CCD(1B) up to ₹50K, and home loan interest up to ₹2L.

Question 9

Is New Regime default from AY 2024-25?

Answer

Yes. The New Regime is the default from AY 2024-25. You must explicitly opt for the Old Regime in your ITR.

Question 10

How is tax calculated for senior citizens?

Answer

Seniors (≥60) get ₹3L exemption in the Old Regime. Super seniors (≥80) get ₹5L. Under New Regime, all ages get ₹3L.

Question 11

What is 80CCD(1B) NPS deduction?

Answer

80CCD(1B) allows an extra ₹50,000 deduction for voluntary NPS contributions, over and above the ₹1.5L 80C ceiling — only in the Old Regime.