What is an Income Tax Calculator?
Income tax calculators help you easily calculate your tax liability. By inputting your income details and applicable deductions, this calculator accurately estimates your taxes. It is a useful tool for salaried individuals, freelancers, and business owners. An income tax calculator saves time, reduces errors, and provides a clear picture of your tax obligations or potential savings. It enables quick calculation of taxable income and estimation of savings through deductions, rebates, and exemptions. The Policybazaar Income Tax Calculator is updated with the latest income tax changes as per the Union Budget 2025-26 to help estimate tax liability for smarter financial planning.
How to Calculate the Gross Income of an Individual from Different Sources of Income?
To calculate your income tax online using the Taxable Income Calculator 2025, you must first compute your gross income. Gross income comprises earnings from multiple sources, categorized into five groups for ITR filing:
- Income from Salary: This category includes basic salary, allowances, bonuses, and commissions. Employer-provided benefits like leave encashment or gratuity may also be taxable.
- Income from Business or Profession: This includes profits earned by self-employed professionals, freelancers, or business owners. Eligible expenses such as rent, office supplies, or transportation are deducted from revenue to calculate net income.
- Income from House Property: This includes rental income from owned properties. A standard deduction of 30% is permitted on rental income, with adjustments for municipal taxes.
- Income from Capital Gains: This category includes earnings from selling capital assets like gold or property. It is classified as Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG), with taxation varying based on the asset’s holding period.
- Income from Other Sources: Other income sources include interest from savings accounts, fixed deposits, dividends, and gifts. Lottery winnings or income from freelance work may also fall under this category.
Impact of Income Sources on Tax Under New and Old Tax Regimes
All mentioned income sources contribute to your taxable income, increasing your tax liability under both new and old tax regimes:
- Salary Income: The old regime permits exemptions like HRA, while the new regime offers lower rates but no exemptions.
- House Property Income: The old regime provides a home loan interest deduction, which is not available in the new regime.
- Business or Professional Income: The old tax regime offers more deductions, while the new regime simplifies with fewer claims.
- Investment Income: The old regime provides tax benefits for investments, whereas the new regime offers none.
- Capital Gains: Both regimes adhere to the same capital gains tax rules.
Income Tax Calculator for Salaried Employee (Illustration)
There are no fixed rules to determine which tax option is more beneficial for an individual. You should calculate based on your savings and investment portfolio to decide which regime is better for a salaried employee.
Here’s an example for a salaried employee (below 60 years of age) with an income of ₹15,00,000:
Step 1: Calculate Gross Salary: Add your Basic Salary, HRA, Special Allowance, and other components before deductions. Gross Salary: ₹15,00,000.
Step 2: House Rent Allowance Exemption (HRA): If you rent a house, you can claim HRA exemption under Section 10(13A) of the Income Tax Act, 1961, based on your salary, rent paid, and location. The HRA allowance is the lower of:
- Actual HRA received
- 50% of basic salary (for metro cities: Delhi, Mumbai, Chennai, Kolkata) or 40% (for non-metro cities)
- Rent paid minus 10% of basic salary
- HRA with Old Regime With Savings: ₹3,50,000
- HRA with Old Regime Without Savings: ₹0
- HRA with New Regime: ₹0
Step 3: Determine the Gross Total Income from Salary: Deduct HRA and Special Allowance from your gross salary to get the total income under both tax regimes.
- Gross Total Income from Salary under Old Regime With Savings: ₹11,50,000
- Gross Total Income from Salary under Old Regime Without Savings: ₹15,00,000
- Gross Total Income from Salary under New Regime: ₹15,00,000
Step 4: Standard Deduction: All salaried employees can claim a flat deduction from their taxable salary under Section 16(ia).
- Old Regime With Savings: ₹50,000
- Old Regime Without Savings: ₹50,000
- New Regime: ₹75,000
Step 5: Home Loan Interest (Old Regime Only): Deductions are allowed under Section 80EE for home loan interest paid on a residential property.
- Old Regime With Savings: ₹2,00,000
- Old Regime Without Savings: ₹0
- New Regime: ₹0
Step 6: Calculate Gross Total Income: Subtract the interest on housing loans paid under the old and new tax regimes.
- Gross Total Income under Old Regime With Savings: ₹9,00,000
- Gross Total Income under Old Regime Without Savings: ₹14,50,000
- Gross Total Income under New Regime: ₹14,25,000
Step 7: Deduct Section 80C, 80D, and 80CCD(1B) (Only Applicable to Old Regime):
- Section 80C Deduction: ₹1,50,000 (on tax-saving investments like ULIP, PPF, SSY, home loan repayment, and EPF).
- Section 80D Deduction: ₹25,000 (on purchasing health insurance for self, spouse, and children).
- Section 80CCD(1B) (for NPS Self Contribution): Both salaried and self-employed can claim an additional ₹50,000 for NPS contributions under Section 80CCD(1B), beyond the ₹1.5 lakhs deductions.
Step 8: Calculate Taxable Income: Subtract the available investment deductions from your gross total income.
- Old Regime With Savings: ₹6,75,000
- Old Regime Without Savings: ₹14,50,000
- New Regime: ₹14,25,000
Step 9: Calculate Total Taxes for AY 2025-26: Estimate your tax liabilities for both new and old tax regimes based on the tax slabs for your taxable income.
| Particulars | Old Tax Regime with Savings (FY 2025-26) | Old Tax Regime without Savings (FY 2025-26) | New Tax Regime (FY 2025-26) |
| Gross Salary | ₹15,00,000 | ₹15,00,000 | ₹15,00,000 |
| Less: HRA Exemption | (-) ₹3,50,000 | (-) ₹0 | (-) ₹0 |
| Gross Total Income from Salary | ₹11,50,000 | ₹15,00,000 | ₹15,00,000 |
| Less: Standard Deduction | (-) ₹50,000 | (-) ₹50,000 | (-) ₹75,000 |
| Less: Home Loan Interest | (-) ₹2,00,000 | (-) ₹0 | (-) ₹0 |
| Gross Total Income | ₹9,00,000 | ₹14,50,000 | ₹14,25,000 |
| Less: Deductions under Section 80C | (-) ₹1,50,000 | (-) ₹0 | (-) ₹0 |
| Less: Deductions under Section 80D | (-) ₹25,000 | (-) ₹0 | (-) ₹0 |
| Less: Deductions under Section 80CCD (1B) | (-) ₹50,000 | (-) ₹0 | (-) ₹0 |
| Taxable Income | ₹6,75,000 | ₹14,50,000 | ₹14,25,000 |
| Tax Liabilities as per Tax Slab | (0% x ₹2,50,000) + (5% x ₹2,50,000) + (20% x ₹1,75,000) | (0% x ₹2,50,000) + (5% x ₹2,50,000) + (20% x ₹5,00,000) + (30% x ₹4,50,000) | (0% x ₹3,00,000) + (5% x ₹4,00,000) + (10% x ₹3,00,000) + (15% x ₹2,00,000) + (20% x ₹2,25,000) |
| Tax Liabilities | ₹47,500 | ₹2,47,500 | ₹1,25,000 |
| Education Cess @ 4% | ₹1,900 | ₹9,900 | ₹5,000 |
| Total Tax Liabilities (with Education Cess) | ₹49,400 | ₹2,57,400 | ₹1,30,000 |
Step 10: Tax Rebate: You can avail a tax rebate under Section 87A if you meet the specified conditions.
- Old Regime: If your income is up to ₹5,00,000, your tax rebate is the lower of the tax payable on total income or an amount up to ₹12,500.
- New Regime: You get a tax rebate of the lower of the tax payable on total income or an amount up to ₹25,000 if your income is up to ₹7,00,000.
- Old Regime With Savings: Not applicable
- Old Regime Without Savings: Not applicable
- New Regime: Not applicable
Step 11: TDS and Form 16: Your employer deducts TDS from your salary and provides Form 16, which summarizes your overall tax.
Step 12: Filing ITR: To complete the income tax process for a salaried employee, you must file your Income Tax Returns (ITR) by correctly filling out your ITR form and submitting it by the due date (typically July 31st).
INCOME TAX CALCULATOR FOR A.Y. 2025-26 (F.Y. 2024-25) (FOR RESIDENT INDIVIDUAL AGE BELOW 60 YEARS AND HAVING INCOME UP TO RS.50 LAKH AND WHICH WAS TAXABLE AS PER NORMAL SLAB RATES).
Enter Actual Amount of Income and Deductions in black highlighted cells and it gives you Calculation of Tax Amount as per Old Regime and New Regime and also indicate which regime is beneficial for you
Some Unique Features of this Tax Calculator for FY 2024-25
- It provides Calculation of Tax (slab rate wise tax on income)
- It considers the effect of Standard Deduction for Salary Income (Rs.50,000 for old regime and Rs.75,000 for new regime)
- It considers effects of marginal relief for new tax regime
- It provides difference between tax amount under both regime and also indicates which regime is beneficial
https://drive.google.com/file/d/1jC7kKGFC88uRahXWk32dTNacs46X2vo0/view
Download the excel file from above link and enter the amounts in black highlighted cells