Income Tax Calculator (FY 2026-27, AY 2027-28)
Designed for salaried professionals, pensioners, and individual taxpayers across India to accurately estimate tax liability under both regimes. Compare FY 2026-27 tax slabs, deductions, Section 87A rebate, and identify which tax regime saves you more money.
1. Your Income & Tax Profile
These tax deductions apply exclusively to the Old Regime. The New Regime offers simpler slabs with a flat ₹75,000 standard deduction without needing bills.
2. Tax Comparison & Verdict
* Monthly take-home pay is computed as (Gross Income − Total Income Tax) ÷ 12 before employee Provident Fund (EPF), NPS contributions, and state professional tax (PT).
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Compute 5%, 12%, 18%, and 28% GST forward and reverse amounts instantly.
How the Income Tax Calculator Works
Under Indian income tax law, your total tax liability depends on your net taxable income, whether you opt for the New or Old tax regime, your age category, and your eligibility for Section 87A rebate and surcharge thresholds.
New Tax Regime Formula (Default)
Taxable Income = Gross Salary − Standard Deduction (₹75,000)
Tax is calculated on slab tiers: ₹0–4L (0%), ₹4L–8L (5%), ₹8L–12L (10%), ₹12L–16L (15%), ₹16L–20L (20%), ₹20L–24L (25%), and >₹24L (30%). If taxable income is ₹12 Lakh or less, Section 87A rebate equals the total tax (up to ₹60,000), making tax ₹0. A 4% Health & Education Cess is added to net tax.
Old Tax Regime Formula (Optional)
Taxable Income = Gross Salary − Std Ded (₹50,000) − Deductions (80C + 80D + 24b + NPS + HRA)
Tax slabs: ₹0–2.5L (0%), ₹2.5L–5L (5%), ₹5L–10L (20%), and >₹10L (30%). If taxable income is ₹5 Lakh or less, Section 87A rebate gives up to ₹12,500 relief. A 4% Health & Education Cess applies to final tax.
Worked Example: Salaried Employee with ₹12,75,000 Gross Salary
Consider a taxpayer earning an annual gross salary of ₹12,75,000 with ₹1,50,000 in Section 80C investments, ₹25,000 in health insurance (80D), and ₹50,000 in NPS:
- New Regime Calculation: Standard deduction of ₹75,000 reduces taxable income to exactly ₹12,00,000. Base slab tax:
(₹4L @ 5% = ₹20,000) + (₹4L @ 10% = ₹40,000) = ₹60,000. Since taxable income does not exceed ₹12 Lakh, Section 87A rebate provides a full ₹60,000 credit. Total Tax = ₹0. Take-Home = ₹12,75,000 / year (₹1,06,250 / month). - Old Regime Calculation: Standard deduction (₹50,000) + 80C (₹1,50,000) + 80D (₹25,000) + NPS (₹50,000) = ₹2,75,000 total deductions. Taxable income becomes ₹10,00,000. Slab tax:
(₹2.5L @ 5% = ₹12,500) + (₹5L @ 20% = ₹1,00,000) = ₹1,12,500. Adding 4% cess (₹4,500) gives Total Tax = ₹1,17,000. - Verdict: The taxpayer saves ₹1,17,000 annually by choosing the New Tax Regime!
Is Income Up to ₹12 Lakh Really Tax-Free?
Yes, for individuals opting for the New Tax Regime in FY 2026-27, total income up to ₹12 Lakh attracts zero income tax thanks to the enhanced rebate under Section 87A. Furthermore, for salaried employees and pensioners, the flat standard deduction of ₹75,000 increases this effective tax-free threshold to ₹12,75,000.
However, it is crucial to understand three important legal conditions:
- Applies to Net Taxable Income: The ₹12,00,000 threshold applies to your taxable income after subtracting eligible deductions (such as the standard deduction and employer NPS contributions under 80CCD(2)).
- Excludes Special-Rate Income: The Section 87A rebate does not offset tax on special-rate income, such as short-term capital gains on equity under Section 111A (taxed at 20%) or long-term capital gains under Section 112A (taxed at 12.5% above ₹1.25 Lakh).
- Section 87A Marginal Relief: If your taxable income slightly crosses ₹12 Lakh (e.g. ₹12,10,000), marginal relief ensures you do not face an abrupt tax penalty. The tax liability is strictly capped at the amount of income exceeding ₹12 Lakh.
How to Choose Between New and Old Tax Regimes
Choosing the right regime comes down to your total eligible deductions under the Old Regime compared to the lower slab rates of the New Regime:
Choose New Regime If:
- Your gross salary is up to ₹12.75 Lakh (you pay zero tax without locking money in investments).
- Your total deductions (80C, 80D, home loan interest, HRA) are less than ₹3.75 Lakh to ₹4.25 Lakh.
- You prefer liquidity and do not wish to lock funds into 5-year lock-in tax saving instruments.
- You want simple tax filing without maintaining receipts, rent agreements, or investment proofs.
Choose Old Regime If:
- You pay substantial house rent and claim large HRA exemptions in metro cities.
- You have an active self-occupied home loan with ₹2 Lakh interest deduction under Section 24(b).
- You maximize 80C (₹1.5L), 80D (₹50k), and NPS 80CCD(1B) (₹50k), pushing deductions above ₹4.5 Lakh.
- You are in the 30% tax bracket with combined deductions exceeding ₹4,25,000.
Things People Get Wrong About Income Tax
1. Believing Slab Rates Apply to Entire Income
Tax brackets in India are progressive and marginal. If your taxable income is ₹15 Lakh, you do not pay 15% on the entire ₹15 Lakh. Your first ₹4 Lakh is taxed at 0%, the next ₹4 Lakh at 5%, the next ₹4 Lakh at 10%, and only the amount exceeding ₹12 Lakh is taxed at 15%.
2. Thinking Standard Deduction Requires Bills
The standard deduction of ₹75,000 under the New Regime and ₹50,000 under the Old Regime is an automatic statutory deduction granted to all salaried individuals and pensioners. You do not need to submit fuel bills, medical receipts, or conveyance proofs to claim it.
3. Forgetting Section 87A Marginal Relief
Many taxpayers believe that earning ₹12,05,000 will instantly trigger a massive ₹60,000 tax bill. Under Section 87A marginal relief, your tax payable cannot exceed the amount by which your income exceeds ₹12 Lakh (i.e. ₹5,000 + cess), protecting your take-home pay.
4. Confusing Financial Year with Assessment Year
Income earned between April 1, 2026, and March 31, 2027, belongs to Financial Year (FY) 2026-27. When you file your return between April and July 2027, you file for Assessment Year (AY) 2027-28. Selecting the wrong year in tax portals leads to invalid filing notices.
Frequently Asked Questions (FAQ)
What is the difference between Financial Year (FY) and Assessment Year (AY)?
A Financial Year (FY) is the 12-month period from April 1 to March 31 in which you earn income. The Assessment Year (AY) is the immediately following year in which that earned income is evaluated, assessed, and taxed by the Income Tax Department. For income earned between April 1, 2026, and March 31, 2027, the Financial Year is FY 2026-27 and the Assessment Year is AY 2027-28.
Can I switch between the New and Old Tax Regimes every year?
Yes, salaried individuals with no business or professional income have the flexibility to switch between the New and Old Tax Regimes every financial year when filing their Income Tax Return (ITR). However, individuals with business or professional income (under PGBP) can opt out of the new regime only once in their lifetime and cannot easily switch back every year.
How does Section 87A marginal relief work if my income slightly exceeds ₹12 Lakh?
Under the new tax regime, if your taxable income is up to ₹12 Lakh, you receive a full tax rebate under Section 87A resulting in zero tax. If your taxable income slightly exceeds ₹12 Lakh, marginal relief ensures that the total income tax payable cannot exceed the amount by which your taxable income exceeds ₹12 Lakh. This prevents an unfair scenario where earning a small bonus leads to a tax bill larger than the bonus itself.
Is advance tax mandatory for salaried individuals?
If your employer deducts accurate TDS covering your total tax liability, you do not need to pay advance tax. However, if you have significant non-salary income (such as capital gains, fixed deposit interest, or rental income) that results in a net tax liability exceeding ₹10,000 after TDS, you must pay advance tax in quarterly installments (June 15, Sept 15, Dec 15, and March 15) to avoid penal interest under Sections 234B and 234C.
How does TDS deducted by an employer get adjusted against final tax liability?
TDS (Tax Deducted at Source) deducted monthly by your employer is deposited with the government and recorded in Form 26AS and your Annual Information Statement (AIS). When filing your ITR, your total computed tax liability is credited against the total TDS paid. If excess tax was deducted, you receive an income tax refund with interest; if there is a shortfall, you pay the remaining self-assessment tax.
Can non-salaried individuals claim the standard deduction under the new regime?
No. The standard deduction of ₹75,000 under the new regime (and ₹50,000 under the old regime) is available exclusively to salaried employees and pensioners receiving pension income taxable under the head 'Salaries'. Self-employed professionals, freelancers, and business owners cannot claim the standard deduction, though they can deduct legitimate business expenses.