How your tax is calculated
The calculator follows the same order of operations the Income-tax Act prescribes, line by line, and shows every step so you can check it against your Form 16 or payslip:
- Compute the HRA exemption as the least of three statutory amounts (section 10(13A)).
- Arrive at salary income after exemptions, the standard deduction and professional tax (section 16).
- Compute house-property income, including home-loan interest capped at ₹2,00,000 for a self-occupied property (section 24(b)).
- Add other income to reach gross total income.
- Apply the Chapter VI-A deductions, each capped by its section, and cap the total at gross total income.
- Round total income to the nearest ₹10 (section 288A).
- Apply the slab rates for the regime, then the Section 87A rebate with its marginal relief.
- Apply the surcharge for the total-income band, again with marginal relief.
- Add the 4% health and education cess, then round the tax payable to the nearest ₹10 (section 288B).
- Compare the two regimes and compute the break-even deduction.
New vs old regime at a glance
The two regimes differ in three ways: the slab rates, the standard deduction, and which deductions and exemptions survive. These are the slab tables the calculator uses — the same objects that produce every number in the tool:
New regime, 2026-27
| Total income | Rate |
|---|---|
| 0 – 4,00,000 | 0% |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| 24,00,001 – above | 30% |
Old regime, 2026-27
| Total income | Rate |
|---|---|
| 0 – 2,50,000 | 0% |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| 10,00,001 – above | 30% |
The old-regime exemption limit widens with age: ₹2,50,000 below 60, ₹3,00,000 from 60 and ₹5,00,000 from 80. Under section 115BAC the new regime drops HRA, most of 80C and home-loan interest, but keeps a ₹75,000 standard deduction and employer NPS under section 80CCD(2). See the full old vs new comparison.
What is the Section 87A rebate?
Section 87A gives resident individuals a rebate: ₹60,000 under the new regime when total income is at most ₹12,00,000, and ₹12,500 under the old regime when it is at most ₹5,00,000. The rebate cannot cancel more tax than you owe, so the new regime zeroes out tax anywhere up to ₹12 lakh of taxable income.
Just above ₹12 lakh, marginal relief stops the jump: the increase in tax cannot exceed the increase in income over the ₹12,00,000 limit. At ₹12,10,000 of total income the slab tax is ₹61,500, but marginal relief reduces it to ₹10,000 — ₹400 with cess — instead of ₹61,500 plus cess.
A ₹12,85,000 gross salary gives a total income of ₹12,10,000 after the ₹75,000 standard deduction. Tax payable: ₹10,400, not ₹63,960. Without marginal relief, ten thousand rupees of extra income would cost more than fifty thousand rupees of tax.
Deductions that change the answer
The old regime is worth its complexity only if the deductions carry real weight. These are the sections the calculator supports and their caps:
| Section | Cap | Regime |
|---|---|---|
| 80C — provident fund, PPF, ELSS, life insurance, tuition | ₹1,50,000 | Old only |
| 80CCD(1B) — additional NPS contribution | ₹50,000 | Old only |
| 80CCD(2) — employer NPS | 14% of basic+DA | Old and new (10% in old) |
| 80D — health insurance, self | ₹25,000 (₹50,000 at 60+) | Old only |
| 80D — health insurance, parents | ₹25,000 (₹50,000 if parents 60+) | Old only |
| 80E — education-loan interest | Uncapped, up to 8 years | Old only |
| 80G — eligible donations | Certified eligible amount | Old only |
| 80TTA / 80TTB — savings interest | ₹10,000 (₹50,000 at 60+) | Old only |
| Standard deduction | ₹50,000 old / ₹75,000 new | Old and new |
Which regime should you choose?
The recommendation is arithmetic, not advice. The engine runs the full pipeline twice — once per regime — on the same inputs and shows the saving. When the new regime wins, it also reports the break-even: the additional deduction the old regime would need before it stopped losing.
| Profile | Inputs | New regime | Old regime |
|---|---|---|---|
| First job, ₹7,00,000 gross | Standard deduction only | ₹0 | ₹44,200 |
| Mid-career, ₹12,00,000 gross | Section 80C ₹1,50,000; 80D ₹25,000 | ₹0 | ₹1,11,800 |
| Senior citizen, ₹10,00,000 income | Pension ₹10,00,000; savings interest ₹50,000 | ₹0 | ₹1,04,000 |
Instead of memorising thresholds, open the calculator, tick your deductions, and read the break-even number — it tells you exactly how much 80C or NPS room would change the verdict.
What this calculator does not cover
Capital gains, business or professional income, foreign assets and already-paid taxes such as TDS are out of scope — so the tax shown is a liability, not a balance due or a refund. Two employers in one year also change the standard-deduction arithmetic and are not modelled. NRIs can still estimate slabs, but the Section 87A rebate does not apply to non-residents, and the tool says so when you select the NRI status.
Frequently asked questions
How do I calculate my income tax for FY 2026-27?
Enter your gross salary, then any HRA, rent and deductions. The calculator computes total income under both the new and the old regime, applies the slab rates, the Section 87A rebate, any marginal relief, surcharge and the 4% cess, and rounds the final figure to the nearest ₹10 under section 288B.
Is tax zero below ₹12 lakh under the new regime?
Up to ₹12,00,000 of taxable income, the Section 87A rebate of ₹60,000 cancels the slab tax completely, so tax payable is zero for residents. Above ₹12 lakh, marginal relief keeps the increase in tax at or below the increase in income above the ₹12 lakh limit, so there is no cliff edge.
Which regime is better for a ₹12 lakh salary?
For a ₹12,00,000 gross salary the new regime results in zero tax through the rebate. The old regime costs roughly ₹1,11,800 even with ₹1,50,000 of 80C and ₹25,000 of 80D, because it starts from a ₹50,000 standard deduction and higher slab rates. The comparison depends entirely on your deductions, which is why the tool computes both.
How is the HRA exemption calculated?
It is the least of three amounts: the HRA you received, rent paid minus 10% of basic salary plus dearness allowance, and 50% of basic+DA if you live in Delhi, Mumbai, Kolkata or Chennai (40% elsewhere). The full least-of-three formula is on the HRA exemption page.
What is the standard deduction for FY 2026-27?
₹75,000 under the new regime and ₹50,000 under the old regime. It is applied automatically against salary or pension income — you never enter it, but it appears as a computed line in the result.
Is the surcharge capped at 25% under the new regime?
Yes. In the old regime the surcharge reaches 37% above ₹5 crore of total income; the new regime caps it at 25%. Between ₹50 lakh and ₹5 crore the bands are 10%, 15% and 25% in both regimes, with marginal relief at each threshold.
Does the calculator store my data?
No. The calculation runs entirely in your browser. There is no account, no email, and no server-side storage. If you share the result, the figures you entered are encoded in the link itself, so anyone who opens it can see them.
Does this cover capital gains or business income?
No. This estimate covers salary, pension, house property and other single-slab-rate income, plus the common Chapter VI-A deductions. Capital gains, business income and foreign assets are out of scope for this tool.
Which financial year can I calculate?
FY 2026-27 (AY 2027-28) is the default. FY 2025-26 (AY 2026-27) remains selectable and uses the prior-year rate schedule, so you can compare years without changing tools.
What rounding does the calculator use?
Total income is rounded to the nearest ₹10 under section 288A (fractions of ₹5 round up) before the slab tax is computed, and the final tax payable is rounded to the nearest ₹10 under section 288B.
Sources and review
Rates come from the CBDT rates document and the Finance Act 2026: 2026-27 (AY 2027-28), reviewed 28 October 2026. Income Tax Department tax rates; the prior-year view uses the 2025-26 schedule, reviewed 28 October 2026. Every figure on this page and in the calculator comes from the versioned rate object — no slab, cap or limit is repeated by hand. The sample used by the calculator button is gross salary 12,00,000, basic+DA 6,00,000, HRA 2,40,000 and rent 2,40,000 in a metro.
This estimate is not tax advice. For filings, use the official e-filing portal or a qualified professional.