What is an Income Tax Calculator?

With the ever-changing income tax rules and tax rates, understanding how much tax you owe can be quite confusing. An online tax calculator is a free tax calculator that can help you to easily, quickly, and accurately calculate your tax liabilities. You simply need to enter some details such as your age, income, deductions, allowances, and exemptions, and the tax calculator instantly displays your tax liabilities including cess and surcharge under both, the old as well as the new tax regimes. Let’s check out how you can use Fincart’s income tax calculator.

How to Use the Online Income Tax Calculator?

Fincart’s online income tax calculator is easy to use! Here’s what you need to do:
  • Step 1 - First, you must select the assessment year for which you want to calculate your tax. Remember that the assessment year is different from the financial year. The assessment year is the year following the financial year in which you assess and file your income tax returns. Take this example - if you are calculating tax for income earned during the financial year 2023/24, you would select the assessment year 2024/25. Make sure you choose the correct assessment year as tax slabs and rates can be different every year.
  • Step 2 - Select your age. This is important as different tax rates apply to different age groups under the old tax regime. For example, residents between ages 60 and 80 are considered “Senior Citizens’ and residents 80 and above are ‘Super Senior Citizens’, and are taxed differently.
  • Step 3 - In the next section, you need to provide your income details. This includes your gross salary income, income from other sources, income from interest, and rental income. Make sure to enter all of these accurately and remember to enter the annual amount received rather than monthly. You will also be asked to enter additional details like yearly interest paid on home loans for both, self-occupied and let-out properties.
  • Step 4 - It’s time to enter your deductions. These include Section 80C deductions (like EPF, PPF, NSC, and ELSS), contribution to NPS under Section 80CCD (1B), medical insurance premiums under Section 80D, donations to charity under Section 80G, interest paid on education loans under Section 80E, and interest on savings accounts under Sections 80TTA and 80TTB.
  • Step 5 - The online income tax estimator also needs details of your House Rent Allowance (HRA) in order to give you an accurate result, so in the next step, give a breakdown of your salary by entering your HRA, DA, and basic salary. Also, enter how much rent you pay every year, along with specifying whether or not you live in a metro city. This is important because the HRA exemption is calculated based on these factors.
  • Step 6 - Hit calculate and voila! The tax calculator will instantly give you an estimate of your tax liability under the old and new regimes. Make sure to enter all details accurately as the reliability of the result depends on it.

How do you Calculate Income Tax?

In India, we follow a progressive taxation system where the rate of taxation increases as the income of a person increases. A new tax regime was also introduced in Budget 2020, which offered lower tax rates but also eliminated most of the exemptions and deductions still allowed in the old tax regime. Calculation of tax liability should ideally be done for both tax regimes so that you can compare them and file taxes under the regime offering more savings.

Here’s how you can calculate income tax in India without having to use an income tax rate calculator India:
Suppose Ali, who lives in Mumbai earning a salary of Rs. 15 lakh per annum wants to calculate how much tax he owes.

These are the slabs for the new tax regime:

Income (in lakhs) Income Tax Rate
0 - 3 0
3 - 7 5%
7 - 10 10%
10 - 12 15%
12 - 15 20%
Above 15 30%
  • There is no tax liability on the first three lakhs.
  • In the Rs. 3 lakh to Rs. 7 lakh bracket, only Rs. 4 lakh will be taxed. 5% of 4,00,00 = Rs. 20,000.
  • Similarly, for the Rs. 7 lakh to Rs. 10 lakh bracket, the tax amount would be 10% of Rs. 3,00,000 = Rs. 30,000. Total liability so far = Rs. 30,000 + Rs. 20,000 (of the previous bracket) = Rs. 50,000.
  • We’ll do the same thing for the Rs. 10 lakh to Rs. 12 lakh bracket. 15% is the rate here so 15% of Rs. 2,00,000 = Rs. 30,000. Total tax amount thus far = Rs. 30,000 + Rs. 30,000 + Rs. 20,000 = Rs. 80,000.
  • Finally, we’ll calculate the tax for the Rs. 12 lakh to Rs. 15 lakh bracket. 20% of Rs. 3,00,000 = Rs. 60,000. Total tax amount = Rs. 60,000 + Rs. 30,000 + Rs. 30,000 + Rs. 20,000 = Rs. 1,40,000.
So the tax Ali owes under the new regime would be Rs. 1,40,000. Remember that this is a very simple example. The aim here is to show you how a progressive tax system works. We haven’t taken into account any cess, deductions, or exemptions here.
This is the table which shows the tax rates under the old tax regime for individuals under 60 years of age:
Income (in lakhs) Income Tax Rate
0 - 3 0
3 - 7 5%
7 - 10 10%
10 - 12 15%
12 - 15 20%
Above 15 30%

The calculation works exactly the same way it does under the new tax regime.

  • There is no tax liability on the first 2.5 lakhs. It is the basic exemption limit.
  • In the Rs. 2.5 lakh to Rs. 5 lakh bracket, Rs. 2.5 lakh will be taxed. 5% of 2,50,00 = Rs. 12,500.
  • For the Rs. 5 lakh to Rs. 10 lakh bracket, the tax amount would be 20% of Rs. 5,00,000 = Rs. 1,00,000. This takes the total tax liability thus far to Rs. 1,00,000 + Rs. 12,500 = Rs. 1,12,500.
  • Ali earns Rs. 5 lakh above the Rs. 10 lakh bracket, so 30% of Rs. 5,00,000 = Rs. 1.50,000. Total tax amount = Rs. 1,50,000 + Rs. 1,00,000 + Rs. 12,500 = Rs. 2,62.500.

Again, this is just a showcase of progressive tax calculation without any deductions or cess.
We’ll take a look at a more complex calculation in the next section.

Income Tax Calculation Comparison Based on New vs Old Tax Regime

We saw in the example above the difference choosing the right tax regime can make. Before we go any deeper with the calculation, let’s understand some basic differences between the new and old tax regimes.
  • The new tax regime was introduced in 2020, and it was recently made the default option for taxpayers. It offers much lower tax rates compared to the old regime but does not allow you to claim many common tax deductions and exemptions.
  • The old regime, however, still allows taxpayers to reduce their taxable income by offering them a plethora of tax deductions and exemptions.
  • Based on these facts, one can say that the old regime would be preferable for taxpayers who can claim significant deductions and the new regime for those who don’t have many ways of claiming deductions and exemptions.
It’s always a good idea to calculate tax liability under both regimes so the most efficient decision can be made. By using the income tax calculator new regime and old regime liabilities can be estimated.
Here’s Radhika. She works at a Delhi-based tech company earning a salary of Rs. 18,00,000 per year. Other than that, Radhika has another source of income. She receives interest from her savings account, which was Rs. 12,000 this year. Let’s see how we can calculate her salary without an old and new regime tax calculator.

A breakdown of her salary is given below:

Salary Component Amount (per year) Deductions and Exemptions Taxable Income under the Old Tax Regime Taxable Income under the New Tax Regime
Basic Salary 5,40,000 - 5,40,000 5,40,000
Dearness Allowance 3,90,000 - 3,90,000 3,90,000
HRA 6,50,000 4,00,000 2,50,000 6,50,000
LTA 20,000 12,000 8,000 20,000
Special Allowance 2,00,000 - 2,00,000 2,00,000
Total Rs. 13,88,000 Rs. 18,00,000
Standard Deduction Rs. 50,000 Rs. 75,000
Gross Total Income from Salary Rs.13,38,000 Rs. 17,25,000
Gross Total Income (Adding Interest Received) Rs.13,50,000 Rs. 17,37,000

She also invested in the following instruments this year:

  • Rs. 2.5 lakh in an Equity Linked Savings Scheme.
  • Rs. 50,000 in National Pension Scheme.
  • Paid Rs. 20,000 in medical insurance premiums.
  • Paid Rs. 25,000 as education loan interest.

Let’s take a look at her gross taxable income under the old regime:

Deductions Amount Total
Section 80C 1,50,000 (Maximum limit under 80C)
Section 80CCD 50,000
Section 80D 20,000
Section 80E 25,000
Section 80TTA Rs. 10,000 (Maximum limit under 80TTA)
Total Deductions Rs. 2,55,000
Gross Taxable Income Rs.13,50,000 - Rs. 2,55,000 = Rs. 10,95,000
  • Thus, Radhika’s taxable income under the old regime is Rs. 10,95,000. Tax will be calculated exactly the same way it was in the first example.
  • Her income tax under the old regime = Rs. 1,41,000.
  • A 4% health and education cess is charged on income tax. 4% of Rs. 1,41,000 = Rs. 5,640.
  • Thus Radhika’s total tax liability under the old regime = Rs. 1,46,640

And here is the tax calculation as per new regime:

Here’s Radhika. She works at a Delhi-based tech company earning a salary of Rs. 18,00,000 per year. Other than that, Radhika has another source of income. She receives interest from her savings account, which was Rs. 12,000 this year. Let’s see how we can calculate her salary without an old and new regime tax calculator.
  • No tax on the first Rs. 3 lakh
  • Tax on the next Rs. 4 lakh: 5% of Rs. 4 lakh = Rs. 20,000
  • Tax on the next Rs. 3 lakh: 10% of Rs. 3 lakh = Rs. 30,000
  • Tax on the next Rs. 2 lakh: 15% of Rs. 2 lakh = Rs. 30,000
  • Tax on the next Rs. 3 lakh: 20% of Rs. 3 lakh = Rs. 60,000
  • Tax on the next Rs. 2,37,000: 30% of Rs. 2,37,000 = Rs. 71,100
  • Total = Rs. 20,000 + Rs. 30,000 + Rs. 30,000 + Rs. 60,000 + Rs. 71,100 = Rs. 2,11,100
  • A cess of 4% is charged again: 4% of Rs. 2,11,100 = Rs. 8,444
  • Total tax under the new tax regime = Rs. 2,11,100 + Rs. 8,444 = Rs. 2,19,544
After comparing the two, it is clear that the old regime would be much more beneficial for Radhika, as it saves her over Rs. 70,000! So that’s how you calculate income tax liability under the old and new tax regimes. This is a complex and time-consuming calculation, so it's best to use an online calculator to get instant and accurate results. You need not use the new tax regime calculator or the old tax regime calculator separately. With Fincart, you can get an estimate for both regimes! Go ahead and try out our old and new regime tax calculator right now!

Income Tax Slabs FY 2024-25

The Government frequently makes changes in the income tax slab rates. The finance minister announced some changes in income tax rules and slabs during the Budget 2024, so for the financial year 2024/25 every taxpayer should keep the following in mind:
  • Changes have been made to the new tax regime to make it more attractive. Here you can compare the old tax slab of the new regime (FY 2023/24) with the new tax slab (FY 2024/25):

New Tax Regime for FY 2023/24

Income (in lakhs) Income Tax Rate
0 - 3 0
3 - 7 5%
7 - 10 10%
10 - 12 15%
12 - 15 20%
Above 15 30%

New Tax Regime for FY 2024/25

Income (in lakhs) Income Tax Rate
0 - 3 0
3 - 7 5%
7 - 10 10%
10 - 12 15%
12 - 15 20%
Above 15 30%
  • As you can see, two tax slabs have been changed under the new regime. The limit of the old Rs. 3 lakh to Rs. 6 lakh bracket has been increased by Rs. 1 lakh.
  • The limit for the old Rs. 6 lakh to Rs. 9 lakh bracket has also been increased by Rs. 1 lakh, making it a Rs. 7 lakh to Rs. 10 lakh bracket.
  • Another major change was made to the standard deduction limit in the new tax regime. Previously, taxpayers were allowed a Rs. 50,000 standard deduction but for FY 2024/25, this limit has been increased to Rs. 75,000.
  • As far as the old tax regime is concerned, no changes were announced. The tax slabs remain the same, as does the standard deduction limit of Rs. 50,000.
  • The old tax regime still provides the old deductions as it did previously, however, it is not the default regime.
  • Given below are all the old tax regime slabs for your reference:

Old Tax Regime for Individuals under 60:

Income (in lakhs) Income Tax Rate
0 - 2.5 0
2.5 - 5 5%
5 - 10 20%
Above 10 30%

Old Tax Regime for Individuals between 60 to 80 (Senior Citizens):

Income (in lakhs) Income Tax Rate
0 - 3 0
3 - 5 5%
5 - 10 20%
Above 10 30%

Old Tax Regime for Individuals above 80 (Super Senior Citizens):

Income (in lakhs) Income Tax Rate
0 - 5 0
5 - 10 20%
Above 10 30%

FAQ

Our income tax calculator takes into account your income from various sources, such as salary, rental income, interest, and others and applies the deductions and exemptions you enter. It determines your taxable income by subtracting the relevant deductions and exemptions from your total income. The calculator then applies the tax rates based on both tax regimes to calculate your tax liability, so you can use it to compare the tax payable under both the old and new tax regimes. The tax liability also includes any surcharge and cess to give you an accurate estimate of the total tax payable.
The results from tax calculators are accurate. However, you must make sure to enter the correct income details as well as the relevant deductions, exemptions, and allowances. The choice of assessment year should also be double checked as income tax rules change from time to time. Selecting the wrong assessment year could result in the calculator using old tax rates or missing out on new deductions.
You will require accurate information regarding your total income (salary, profits, rental, and other sources), deductions (such as 800C, 80D, and 80E), and exemptions (HRA, LTA, and others).
Yes! Online tax calculators can help you determine your tax liabilities under various circumstances, such as different income levels, implications of your investments, or changes in applicable deductions and exemptions. You can also use it to understand your tax burden under different regimes.
Whenever the government announces changes that can impact how one’s tax liabilities are calculated, the online income tax calculator gets an update. This generally happens once a year, when the Finance Minister announces new tax rates and other changes in the Union Budget.