Income Tax Calculator

Income tax slabs for FY 2025-26

India's income tax operates under two regimes for FY 2025-26. The new regime under Section 202 of the Income Tax Act, 2025 is the default; taxpayers must explicitly opt for the old regime under Section 202(4) when filing their return.

New regime: Section 202, Income Tax Act, 2025

Most exemptions and deductions are not available under the new regime. The basic exemption threshold is ₹4,00,000, higher than the old regime, and a 4% Health and Education Cess applies on the tax computed.

Old regime — opted under Section 202(4), Income Tax Act, 2025

Senior citizens aged 60–79 get a higher basic exemption of ₹3,00,000. Super senior citizens aged 80 and above get ₹5,00,000. The old regime allows a wider range of deductions and exemptions that reduce taxable income before these rates apply.

For high incomes, a surcharge is also levied on income tax before cess is applied, regardless of regime:

How is income tax calculated?

Income tax applies to taxable income, total income reduced by the standard deduction (for salaried individuals) and any other eligible deductions, at the slab rates above.

Formula

Tax payable = Income tax at slab rates − Rebate (Section 156) + 4% Health and Education Cess

Example: ₹15,00,000 total income, individual below 60 years

At ₹15,00,000 salary with ₹2,00,000 in deductions, the new regime saves ₹97,500.

Some income types are taxed at flat rates that apply irrespective of regime or slab:

• Short-term capital gains on listed equity shares and equity-oriented mutual funds (where STT is paid) are taxed at 20% under Section 196 of the Income Tax Act, 2025.

• Long-term capital gains on the same assets are taxed at 12.5% under Section 198, but only on gains exceeding ₹1,25,000. Gains up to ₹1,25,000 are fully exempt.

• Long-term capital gains on all other assets like property, debt instruments, unlisted securities are taxed at 12.5% under Section 197, with no threshold exemption.

• Virtual digital assets: any income from the transfer of VDAs is taxed at 30%. Only the cost of acquisition can be deducted. Losses from VDA transfers cannot be set off against any other income and cannot be carried forward to subsequent years.

The regime you choose does not affect the tax on these income types.

Zero-tax threshold under the new regime

Under Section 156(2) of the Income Tax Act, 2025, a rebate of up to ₹60,000 is available for individuals whose taxable income does not exceed ₹12,00,000 under the new regime, reducing net tax liability to zero.

For salaried individuals, the ₹75,000 standard deduction under Section 19(1) applies before the rebate threshold is tested. This means a salaried individual with gross salary up to ₹12,75,000 effectively pays zero income tax under the new regime.

For freelancers, consultants, and business owners, the zero-tax benefit applies if taxable income after business expenses and eligible deductions does not exceed ₹12,00,000.

How is taxable income computed?

Salaried individuals deduct the standard deduction under Section 19(1) and then apply their Chapter VIII deductions to arrive at taxable income. Individuals with other income sources have a different path.

Freelancers and consultants who opt for presumptive taxation under Section 55A of the Income Tax Act, 2025 can declare 50% of gross receipts (up to ₹75 lakh) as income, without maintaining detailed books. Tax then applies on that presumed income at the applicable slab rates.

Business owners compute net profit after deducting allowable business expenses under Chapter IV-D of the Income Tax Act, 2025, rent, salaries, depreciation, and other legitimate operating costs, before applying slab rates.

In both cases, Chapter VIII deductions (Section 123, Section 126, and similar) can further reduce taxable income under the old regime. The standard deduction under Section 19(1) does not apply to non-salaried income.