Income Tax Calculator - Old vs New, TY 2026-27

Important update (April 2026): Budget 2026 introduced the "Tax Year" terminology replacing the previous Financial Year / Assessment Year naming.

Reviewed by: CalcMojo Editorial Team

Slab rates and exemption thresholds remain unchanged from the prior year — only the terminology used on forms, notices, and return filings has changed. The calculator below uses the new Tax Year 2026-27 terminology while all underlying computations (slabs, Section 87A rebate, standard deduction, cess, surcharge) remain identical to the prior period.

Filing income tax in India starts with knowing exactly how much you owe. This income tax calculator India computes your total tax liability for Tax Year 2026-27 under both the old regime and the new regime so you can choose the one that saves you more money. Enter your gross salary, exemptions, deductions under Section 80C, 80D, and other applicable sections, and the tool returns a slab-wise tax breakdown, applicable cess, and your net tax payable after TDS.

The Union Budget 2025 introduced significant changes to the new tax regime, including revised slab rates and a higher basic exemption limit. For salaried individuals, choosing the right regime can mean a difference of tens of thousands of rupees. This calculator models both regimes side by side, letting you see the exact impact of your HRA exemption, 80C investments, NPS contributions under 80CCD(1B), and health insurance premiums under 80D.

Whether you are a salaried employee preparing to file your ITR, a freelancer estimating advance tax, or simply planning your tax-saving investments for the year, this tool gives you the numbers you need in seconds. Adjust any input, compare regimes instantly, and make informed decisions about your tax planning strategy before the financial year ends.

How Income Tax Is Calculated in India

Income tax in India follows a progressive slab system where higher income is taxed at higher rates. The calculation starts with your gross total income, which includes salary, house property income, capital gains, business income, and income from other sources. From this gross total, you subtract eligible deductions and exemptions to arrive at your taxable income. The tax is then computed slab by slab based on the applicable regime.

Step-by-step calculation:

Compute Gross Total Income — Add all income sources: salary, rental income, interest income, capital gains, and business profits.
Subtract Exemptions — Under the old regime, exemptions like HRA, LTA, and standard deduction reduce your gross income. The new regime offers a standard deduction but limits most other exemptions.
Subtract Deductions — Under the old regime, deductions under Sections 80C (up to ₹1.5 lakh), 80D (health insurance), 80CCD(1B) (NPS), 80E (education loan interest), and others reduce taxable income further. The new regime allows very limited deductions.
Apply Tax Slabs — The remaining taxable income is taxed slab by slab at the applicable rates.
Add Health and Education Cess — A 4% cess is levied on the total tax amount.
Subtract TDS and Advance Tax — Any tax already paid through TDS or advance tax installments is deducted from the total liability to arrive at the net tax payable or refund due.

For salaried individuals, the employer deducts TDS based on the regime you declare at the start of the year. If your actual deductions or income differ from the projections, you may owe additional tax or receive a refund when filing your ITR.

New Tax Regime vs Old Tax Regime: Tax Year 2026-27

The most critical decision for Indian taxpayers is choosing between the old and new tax regimes. Since FY 2023-24, the new regime has been the default, meaning you must actively opt for the old regime if it benefits you.

New Tax Regime Slabs (Tax Year 2026-27):

Up to ₹4,00,000 — Nil
₹4,00,001 to ₹8,00,000 — 5%
₹8,00,001 to ₹12,00,000 — 10%
₹12,00,001 to ₹16,00,000 — 15%
₹16,00,001 to ₹20,00,000 — 20%
₹20,00,001 to ₹24,00,000 — 25%
Above ₹24,00,000 — 30%

The new regime offers a standard deduction of ₹75,000 for salaried individuals and a rebate under Section 87A for taxable income up to ₹12,00,000, effectively making income up to ₹12,75,000 tax-free for salaried persons.

Old Tax Regime Slabs (Tax Year 2026-27):

Up to ₹2,50,000 — Nil
₹2,50,001 to ₹5,00,000 — 5%
₹5,00,001 to ₹10,00,000 — 20%
Above ₹10,00,000 — 30%

The old regime retains all traditional exemptions and deductions: HRA, LTA, Section 80C (₹1.5 lakh), Section 80D, home loan interest under Section 24(b), and others.

Which regime should you choose?

The new regime benefits taxpayers who do not have significant deductions — typically those without a home loan, limited 80C investments, or no HRA exemption. The old regime benefits those who maximize deductions: salaried individuals with HRA, full 80C utilization, NPS contributions, and health insurance premiums. Use our HRA Calculator to compute your exact HRA exemption before making this decision.

As a rough guideline, if your total deductions and exemptions (excluding standard deduction) exceed ₹3.75 lakh, the old regime is likely more beneficial. Below that threshold, the new regime typically wins.

Key Deductions That Reduce Your Tax

Understanding the deductions available under the old regime is essential for effective tax planning.

Section 80C — Up to ₹1,50,000. This is the most widely used deduction. Eligible investments include EPF contributions, PPF deposits, ELSS mutual funds, NSC, tax-saving fixed deposits, life insurance premiums, tuition fees for children, and home loan principal repayment. Most salaried individuals exhaust this limit through a combination of EPF (employer contribution is automatic) and one or two additional investments. Explore PPF returns with our PPF Calculator or check your EPF accumulation using the EPF Calculator.

Section 80D — Health Insurance Premiums. You can deduct up to ₹25,000 for health insurance premiums paid for yourself, spouse, and children. An additional ₹25,000 is available for parents (₹50,000 if parents are senior citizens). If you are also a senior citizen, the self/family limit increases to ₹50,000.

Section 80CCD(1B) — NPS Contribution. An additional deduction of up to ₹50,000 is available for contributions to the National Pension System, over and above the 80C limit. This makes NPS one of the most tax-efficient retirement instruments. Model your NPS corpus with the NPS Calculator.

Section 24(b) — Home Loan Interest. Interest paid on a home loan for a self-occupied property is deductible up to ₹2,00,000 per year. For let-out properties, the entire interest amount is deductible (with overall loss from house property capped at ₹2,00,000 for set-off).

Section 80E — Education Loan Interest. The entire interest paid on an education loan (no cap) is deductible for up to 8 years from the year you start repaying. This applies to loans for higher education of self, spouse, or children.

Section 80TTA/80TTB — Savings Account Interest. Interest earned on savings accounts is deductible up to ₹10,000 (80TTA) for non-senior citizens or ₹50,000 (80TTB) for senior citizens.

Advance Tax: Who Needs to Pay and When

If your total tax liability after TDS exceeds ₹10,000 in a financial year, you are required to pay advance tax in quarterly installments. This applies to freelancers, business owners, and salaried individuals with significant non-salary income like capital gains or rental income.

Advance Tax Due Dates:

15 June — At least 15% of total estimated tax
15 September — At least 45% of total estimated tax
15 December — At least 75% of total estimated tax
15 March — 100% of total estimated tax

Failure to pay advance tax on time attracts interest under Sections 234B and 234C. Section 234B applies when total advance tax paid is less than 90% of the assessed tax. Section 234C applies when installment deadlines are missed. Both charge interest at 1% per month on the shortfall.

Senior citizens (60+) with no business or professional income are exempt from advance tax requirements.

Tax Saving Strategies for Salaried Employees

Effective tax planning is not about last-minute investments in March — it is about structuring your salary and investments throughout the year.

Optimize your salary structure. If your employer offers flexibility, restructure your CTC to include HRA, LTA, food coupons, and reimbursements. HRA alone can save ₹50,000 to ₹2,00,000 in taxes depending on your rent and city. Use the HRA Calculator to check your exact exemption.

Maximize 80C early. Instead of scrambling in March, set up SIPs in ELSS funds starting April. ELSS has the shortest lock-in period (3 years) among 80C instruments and offers equity market returns. Use the SIP Calculator to project ELSS SIP growth over time.

Use NPS for the extra ₹50,000. The Section 80CCD(1B) deduction is above and beyond 80C. A monthly contribution of ₹4,200 to NPS maxes out this deduction and builds a retirement corpus simultaneously.

Claim all medical insurance deductions. If you are paying premiums for yourself and your parents, ensure all policies are declared. A family covering self (₹25,000) and senior citizen parents (₹50,000) gets ₹75,000 in deductions under 80D alone.

Time your capital gains. Long-term capital gains from equity above ₹1.25 lakh are taxed at 12.5%. If you have significant gains, consider harvesting them across financial years to stay below the exemption limit each year.

Common Mistakes When Filing Income Tax

Many taxpayers overpay or face notices due to avoidable errors. Here are the most common ones.

Not reporting all income sources. Interest from savings accounts, fixed deposits, and recurring deposits is taxable. The Income Tax Department receives data from banks through Annual Information Statements (AIS). Any mismatch triggers a notice. Check your AIS on the Income Tax portal before filing.

Choosing the wrong regime. Filing under the new regime when the old regime would save more tax (or vice versa) is irreversible for that assessment year if you are not a business/professional taxpayer. Salaried individuals can switch regimes each year but must do so before filing.

Missing deductions. Employer PF contributions, stamp duty on property purchase, tuition fees, and preventive health check-ups (up to ₹5,000 within 80D) are commonly overlooked deductions.

Not reconciling TDS with Form 26AS. Your employer’s TDS may differ from what you expect. Always cross-check Form 26AS and AIS before filing. If TDS is short, you owe the difference; if over-deducted, you get a refund.

Late filing penalties. The deadline for filing ITR is typically 31 July. Filing after the deadline attracts a late fee of ₹5,000 (₹1,000 if income is below ₹5 lakh) under Section 234F, plus interest on any unpaid tax.

This calculator provides estimates based on Tax Year 2026-27 tax slabs. Consult a Chartered Accountant before filing.

Frequently Asked Questions

Which tax regime is better for Tax Year 2026-27 — old or new?

It depends on your deductions. If your total deductions and exemptions (excluding standard deduction) exceed approximately ₹3.75 lakh, the old regime is usually more beneficial. If you have minimal deductions, the new regime with its lower slab rates and higher basic exemption limit of ₹4 lakh typically results in lower tax. This calculator shows you both side by side so you can compare instantly.

What is the tax rebate under Section 87A for Tax Year 2026-27?

Under the new regime, individuals with taxable income up to ₹12,00,000 receive a full rebate, meaning zero tax payable. For salaried individuals with the ₹75,000 standard deduction, this effectively makes income up to ₹12,75,000 tax-free. Under the old regime, the rebate applies for taxable income up to ₹5,00,000, capping the rebate at ₹12,500.

How is income tax calculated on salary in India?

Start with your gross salary including basic pay, HRA, special allowances, and bonuses. Subtract exemptions like HRA and LTA (old regime) and the standard deduction. Then subtract deductions under 80C, 80D, and other applicable sections. Apply the relevant slab rates to the remaining taxable income. Add 4% health and education cess. Subtract TDS already deducted by your employer to get the net tax payable or refund amount.

Is income up to ₹12 lakh tax-free under the new regime?

Yes, under the new regime for Tax Year 2026-27, individuals with taxable income up to ₹12 lakh pay zero tax due to the Section 87A rebate. For salaried persons, the standard deduction of ₹75,000 pushes this threshold to ₹12.75 lakh in gross income terms. However, if your taxable income exceeds ₹12 lakh by even Re 1, the entire income is taxed slab by slab without the rebate.

Do I need to pay advance tax as a salaried employee?

If your total tax liability after TDS exceeds ₹10,000 for the year, you are required to pay advance tax. This typically applies to salaried individuals who have additional income from freelancing, capital gains, rental income, or interest income where TDS has not been deducted. Advance tax is paid in four quarterly installments.

What is the standard deduction for Tax Year 2026-27?

Under the new tax regime, the standard deduction for salaried individuals and pensioners is ₹75,000 for Tax Year 2026-27. Under the old regime, it remains ₹50,000. The standard deduction is subtracted directly from salary income before computing taxable income and does not require any investment or proof.

Can I claim both 80C and 80CCD(1B) deductions?

Yes. Section 80C allows deductions up to ₹1,50,000 for investments like EPF, PPF, ELSS, and life insurance. Section 80CCD(1B) provides an additional deduction of ₹50,000 specifically for contributions to the National Pension System. Together, they offer up to ₹2,00,000 in deductions. Note that these deductions are only available under the old tax regime.

When is the last date to file income tax return for Tax Year 2026-27?

The due date for filing ITR for Tax Year 2026-27 is typically 31 July 2026 for individuals without audit requirements. For those requiring a tax audit (businesses with turnover above the threshold), the deadline is 31 October 2026. Filing after the deadline attracts a late fee under Section 234F and interest on any unpaid tax under Section 234A.

Default rates shown are illustrative. Always verify current rates with your tax advisor. Data accurate as of: March 2026