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Income Tax Calculator

FY 2024-25 โ€” New & Old Tax Regime

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80C Deductions โ‚น1,50,000
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Income Tax in India โ€” The Basics

Income tax in India is charged on your total income in a financial year (April to March). For most salaried individuals, tax is deducted at source (TDS) by the employer every month based on estimated annual income. When you file your ITR (Income Tax Return), you reconcile this โ€” if excess was deducted, you get a refund; if less was deducted, you pay the difference.

Since 2020, India has two tax regimes โ€” the Old Regime and the New Regime. You choose one each year while filing ITR. The better choice depends on how many deductions and exemptions you can claim.

New Tax Regime vs Old Tax Regime โ€” Which is Better?

New Tax Regime (FY 2024-25 onwards):

Income up to โ‚น3 lakh โ€” NIL โ‚น3 lakh to โ‚น7 lakh โ€” 5% โ‚น7 lakh to โ‚น10 lakh โ€” 10% โ‚น10 lakh to โ‚น12 lakh โ€” 15% โ‚น12 lakh to โ‚น15 lakh โ€” 20% Above โ‚น15 lakh โ€” 30% Rebate under 87A: Tax = NIL if income โ‰ค โ‚น7 lakh

Old Tax Regime:

Income up to โ‚น2.5 lakh โ€” NIL โ‚น2.5 lakh to โ‚น5 lakh โ€” 5% โ‚น5 lakh to โ‚น10 lakh โ€” 20% Above โ‚น10 lakh โ€” 30% Rebate under 87A: Tax = NIL if income โ‰ค โ‚น5 lakh Standard Deduction: โ‚น50,000

New regime is simpler โ€” fewer deductions but lower slab rates. Old regime allows HRA, 80C, 80D, home loan interest, LTA and many other deductions that can significantly reduce taxable income.

General rule: If your total deductions exceed roughly โ‚น3โ€“3.5 lakh, old regime is better. If deductions are less, new regime saves more tax. Use this calculator to compare both.

Major Deductions Under Old Regime

Section 80C (up to โ‚น1.5 lakh) โ€” EPF contribution, PPF, ELSS, life insurance premium, home loan principal, childrens tuition fees, NSC, 5-year tax saving FD. This alone is the most used deduction.

Section 80D (up to โ‚น25,000) โ€” Health insurance premium for self and family. Additional โ‚น25,000 for parents premium (โ‚น50,000 if parents are senior citizens).

HRA Exemption โ€” If you live in rented accommodation and receive HRA as part of salary, a portion is tax exempt. The exempt amount is minimum of: actual HRA received, rent paid minus 10% of salary, 50% of salary (metro) or 40% of salary (non-metro).

Section 24 โ€” Home Loan Interest โ€” Up to โ‚น2 lakh per year on interest for self-occupied property. No limit for let-out property.

Standard Deduction โ€” โ‚น50,000 flat deduction for all salaried employees in old regime. No bills needed.

When Must You File ITR?

You must file ITR if your gross income exceeds the basic exemption limit โ€” currently โ‚น2.5 lakh for individuals below 60. Even if TDS has been deducted fully, filing ITR is compulsory in certain cases: if you have foreign assets, if you want to carry forward losses, if you have income from business or capital gains. Also filing ITR creates a good financial record โ€” useful for visa applications, loan processing, and business dealings.

FAQs

Can I switch between old and new tax regime every year?
Salaried individuals can switch between regimes every year at the time of filing ITR. However, if you have business income (as a self employed person or freelancer), you can switch to old regime only once โ€” after that you must stay in old regime or switch to new regime permanently (you cannot keep going back and forth).
What is surcharge and cess on income tax?
After calculating basic income tax, two more charges are added. Health and Education Cess is 4% on total tax โ€” everyone pays this. Surcharge is additional tax for high income earners: 10% surcharge if income is between โ‚น50 lakh and โ‚น1 crore, 15% if between โ‚น1โ€“2 crore, 25% if โ‚น2โ€“5 crore, 37% above โ‚น5 crore (capped at 25% for new regime).
I missed the ITR deadline โ€” what happens?
You can still file a belated return up to December 31st of the same assessment year with a late fee of โ‚น1,000 (if income โ‰ค โ‚น5 lakh) or โ‚น5,000 (if income > โ‚น5 lakh). After December 31st, you can file an updated return (ITR-U) with additional tax of 25โ€“50% on the tax payable. Deliberately not filing when required can attract penalty and prosecution.
How do I know which ITR form to use?
ITR-1 (Sahaj) โ€” For salaried income up to โ‚น50 lakh, one house property, and no business income. Most salaried people use this. ITR-2 โ€” Capital gains, foreign income, more than one house property. ITR-3 โ€” Business or professional income. ITR-4 (Sugam) โ€” For those under presumptive taxation scheme. Filing the wrong form can result in a defective return notice.