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How to Calculate Income Tax?

Estimating your taxes before you file your tax return is essential to tax planning. However, income tax computation requires good knowledge of taxation laws:( Thus, looking at the hardships faced by people, we created a simple online tax calculator tool to help you easily estimate your tax refund or tax payable to the government. Our income tax calculator calculates taxes on the basis of the latest provisions of the Income Tax Act and rules issued by the Income Tax Department.

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What is Income Tax Calculator?

The Income Tax Calculator is an easy-to-use online tool that lets you estimate your taxes based on your income. We've updated our tool as per the proposed income tax changes in the Union Budget 2024-2025.

How does the Income Tax Calculator work for FY 2024-2025 (AY 2025-2026)?

Tax2win’s Income Tax Calculator works on the basis of input provided by the user.

Step 1: Enter the basic details such as name, email address, date of birth, and income source.

Step 2: On the next screen, enter your income details, such as income from salary, rental income, etc.

Step 3: Click on “Next” and enter your income from other sources.

Step 4: Enter the deductions that are applicable to you.

Step 5: Click on “Calculate,” and you will see how much income tax you will have to pay.

Note: In the not applicable field, enter "0."

How to calculate income tax on salary with an example for FY 2024-2025 (AY 2025-2026)?

Calculate Income Tax on Salary
The sum of Basic pay + HRA + Special Allowance + Transport Allowance + any additional allowance and components is the total salary of an individual. Out of this salary, some aspects of your compensation, such as leave travel allowance, HRA, etc., are exempt from income tax subject to certain conditions. So, to calculate your total income tax. It is essential that you have your salary slips with you and know all the components of your salary. Further, you should have all the documents related to your investment handy to calculate your taxes after taking into account the available deductions and exemptions.

Let’s understand how to calculate taxes using both new and old tax regimes with the help of an example:-

  • Income from Salary after HRA and LTA benefit (before considering standard deduction of Rs. 50000) - 9,20,000
  • Income from Other Sources - 20,000
  • Deduction u/s 80C - 1,50,000
  • Deduction u/s 80D - 25000
  • Deduction u/s 80CCD(1B) - 50,000
  • So, the total taxable income would be 6,65,000 and tax liability will be 47320(under Old regime).
Salary Components Amount Exemption allowed
Basic Salary 800000 -
HRA 320000 200000
LTA 10000 10000
Total CTC 1130000 -
Other income 20000 -
80C 150000 -
80D 25000 -
80CCD(1B) 50000 -

Tax calculation as per the old regime for FY 2024-2025 (AY 2025-2026)

Salary Income Amount
Basic 800000
HRA 320000
LTA 10000
Total CTC 1130000
HRA 200000
LTA 10000
Std. deduction 50000
Net taxable salary 870000
Other income 20000
Gross total income 890000
80C 150000
80CCD(1B) 50000
80D 25000
Total deduction 225000
Net taxable income 665000
Total tax on above 47320 (including health & education cess of 4%)
Upto 250000 Upto nil
250000 to 500000 12500
balance 165000 33000
Total (including HEC) 47320

Tax calculation as per the new regime for FY 2024-2025 (AY 2025-2026)

Salary Income Amount
Basic 800000
HRA 320000
LTA 10000
Total CTC 1130000
Standard Deduction 50000
Net taxable salary 10,80,000
Other income 20000
Gross total income 11,00,000
Net taxable income 11,00,000
Total tax on above 78000
Up to 3,00,000 nil
Rs 3,00,001 - Rs 6,00,000 15000
Rs 6,00,001 - Rs 9,00,000 30000
Rs 9,00,001 - Rs 12,00,000 (200000*15%) 30000
Total tax 75000
Education cess@4% 3000
Total 78000

Eligibility Criteria for Using Income Tax Calculator

Any person who falls in the following criteria can use this Income Tax Calculator to calculate Income Tax:

  • Indian Resident
  • Annual Income from Salary / Freelance / Business / House Property / / Other Sources

FAQs related to Income Tax Calculator India

Q How much tax a salaried person should pay in the new tax regime?

A salaried person working under any employer must pay the tax liabilities per the income tax slab to which his salary belongs.
Income Tax Slab Rates are applicable for each Indian resident who is under the age of 60 years and earning income. In case of a new regime, the tax slabs are:

Income Tax Slab Applicable Rate
Up to Rs. 3 lakhs Nil
3 lakhs to Rs 6 lakhs 5%
6 lakhs to Rs 9 lakhs 10%
9 lakhs to Rs 12 lakhs 15%
12 lakhs to Rs 15 lakhs 20%
Above Rs. 15 lakhs 30%

For example, if someone has a taxable annual income of Rs 6 lakhs, then his payable tax will be calculated as:

Income Slab Applicable Rate Payable Tax
Up to Rs. 3 lakhs Zero tax 0
3 lakhs to Rs. 6 lakhs 5% 15,000
Total Payable Tax 15,000
Health and Education Cess@4% 600
Total Tax Payable 15,600

Likewise, one who is earning a total income of Rs. 6 lakhs is required to pay 15,600 (plus some cess) as his income tax to the Income Tax Department, India.

Q How much limit is set for non-taxable income?

As per the old regime, the maximum limit for a non-taxable income is set to Rs. 2.5 lakhs. Moreover, one can also get a benefit under section 87A by taking a rebate of Rs 2,500. For taxpayers who have a total annual income of more than Rs. 2.5 lakhs, the rebate is expanded to Rs. 12,500 (for up to Rs 5 lakhs income) from FY 2019-20 onwards. Other than this, one may get an additional tax relief of up to Rs. 1.5 lakhs under section 80C by investing in any tax-saving instrument like LIC, PPF, Home loan principal Repayments etc.

The Union Budget 2023 introduced some changes in the slab rates for the New Regime. Now, the maximum non-taxable income is set for Rs. 3 lakhs. The taxpayer may also claim a rebate under section 87A of Rs. 25,000 only when his total income is up to Rs. 7 Lakhs for FY 2023-24 and onwards.

Finance Minister Nirmala Sitharaman, on February 1, presented the Union Budget 2024 in the Lok Sabha. This was an interim budget as it came just ahead of the Lok Sabha Elections. No changes were announced in the tax slabs in both the old and new regimes. The full budget will be presented in July this year after the new government is formed after the Lok Sabha elections.

Q Is it necessary to pay Income Tax in 2024?

Income Tax is required to be paid when your income exceeds the basic exemption limit for each financial year. This limit is specified by the government every year. The basic exemption limit is Rs. 3 lakhs in case of a new tax regime and Rs. 2.5 lakhs in the case of the old tax regime only. However, there is a rebate of Rs. 12500/- in case of the old tax regime for income upto Rs. 5 lakhs and Rs. 25000 available u/s 87A in case of the new tax regime for income up to Rs. 7lakhs.

Q What are the Income Tax slabs and rates for FY 2024-2025 (AY 2025-2026)?

The Slab helps to determine the tax rate at which tax will be levied upon you. Earlier, the Government determined various Income Tax Slabs on the basis of the age of the individual. Budget 2020 has given individuals options to choose between new and older tax slabs.

Old Income Tax Slab for FY 2024-2025 (AY 2025-2026)
Up to Rs 2,50,000 NIL
Rs 2,50,001 - Rs 5,00,000 5%
Rs 5,00,001 - Rs 10,00,000 20%
Above Rs 10,00,000 30%
New Tax Regime for FY 2024-2025 (AY 2025-2026)
Up to Rs 3,00,000 NIL
Rs 3,00,001 - Rs 6,00,000 5%
Rs 6,00,001 - Rs 9,00,000 10%
Rs 9,00,001 - Rs 12,00,000 15%
Rs 12,00,01 - Rs 15,00,000 20%
Above - Rs. 15,00,000 30%

Please note that from F.Y 18-19, EC & SHEC has been replaced by the Health & Education Cess@ 4%.

Further, to understand the other slabs of various taxpayers, please click on this link.

Q What is TDS? How to calculate the monthly TDS in 2024?

Tax Deducted at Source (TDS) is a mechanism whereby the tax is deducted directly at the point of origin of income and deposited to the government. It enables speedy collection of taxes. By claiming tax deductions, you can claim this tax paid as a credit while filing your income tax return. In the case of salary income, it is your employer's responsibility to deduct the TDS and deposit it to the government.

For the purpose of calculating the monthly TDS amount, just calculate your taxes from the above calculator and divide it by 12. You will get your monthly TDS amount.

For example: From the above Income Tax calculator, the total tax has been computed at Rs. 60,000, and now, for the purpose of monthly TDS, we shall divide Rs. 60,000 by 12. Hence, the monthly TDS shall be Rs.5,000.

Q How does the Income Tax Calculator compute my final tax liability?

Tax2win’s Income Tax Calculator is an ideal tax tool that computes taxpayers' tax liability on the basis of information entered. You can surely use this up-to-date utility tool for your tax calculation for AY 2023-24, AY 2024- 2025, and AY 2025-26. Your Income-tax liability will be more or less the same, subject to the actual information.

Q Why should I use Tax2win’s Income Tax Calculator in 2024?

With the help of Tax2win’s Income Tax Calculator, it becomes easy to estimate your tax payment for any financial year. It is a quick, simple, and user-friendly tax tool. It is a modern-age tax tool that helps Indian taxpayers estimate their Income Tax liabilities in a few minutes. Why wait? Get a quick and accurate evaluation of your Income Tax today!

Q What are the changes made in the Income Tax rate after the Union Budget 2024 announcement?

No changes were announced for indirect/direct taxes in Budget 2024. This was an interim budget as it came just ahead of the Lok Sabha Elections. The full budget will be presented in July this year after the new government is formed after the Lok Sabha elections.

Q What are the changes made in the Income Tax rate after the Union Budget 2023 announcement?

There are no Changes in the Old Tax Regime; however, the Union Budget 2023 makes some changes in the New Tax Regime Slab Rates for FY 2023-24 and onwards. Now, the basic exemption limit has been raised to Rs. 3 lakhs from Rs. 2.5 lakhs to make the new tax regime more attractive. Also, the No. of slabs was reduced from 7 to 6 in the new tax regime. The income tax slab rates for FY 2023-2024 (AY 2024-2025) are as follows:

Old Regime Income Tax Slab for FY 2023-2024 (AY 2024-2025)

Up to Rs 2,50,000 NIL
Rs 2,50,001 - Rs 5,00,000 5%
Rs 5,00,001 - Rs 10,00,000 20%
Above Rs 10,00,000 30%

New Regime Income Tax Slab for FY 2023-2024 (AY 2024-2025)

Tax Slab Tax Rate
Upto Rs 3,00,000 Nil
Rs. 3,00,001-6,00,000 5%
Rs. 6,00,001-9,00,000 10%
Rs. 9,00,001-12,00,000 15%
Rs. 12,00,01-15,00,000 20%
Above Rs. 15,00,001 30%

Q How to calculate Income Tax for FY 2022-23, FY 2023-24 (AY 2023-24, 2024-25) using Tax2win?

Please follow the below given steps to calculate your income tax through the Tax2win portal and there you are with the tax calculation:

  • Click on this link or visit the income tax calculator online page of Tax2win.
  • Fill all the details as required for tax calculation.
  • Click on "Calculate".

Q What is rebate under section 87A of the Income Tax?

Rebate u/s 87A provides exemption on tax payment to a RESIDENT INDIVIDUAL. As per this provision, if an individual’s taxable income is upto Rs. 7 lakhs under the new tax regime then he will get the tax benefit of Rs. 25,000 or the amount of tax whichever is lower (This tax rebate of Rs 25000/- is only for new tax regime and 12500/- is for old tax regime). If you are liable to pay tax up to the limit of rebate allowed, then after taking the rebate benefit, no payment will be required to be made for the tax amount. For availing the full amount of the rebate, the Total Taxable Income of the return filer shall be up to Rs 7,00,000. Read more: