Calculators
Salary plus other Income should be atleast Rs. 1,00,000.
Old vs New Tax Regime
Compare your tax liabilities under the old versus new tax regimes and determine which works best for you.
The Old vs New Tax Calculator is a digital tool designed to help compare tax liabilities under both the old and new tax regimes.
By entering basic details, you can easily compare the tax amounts payable under both old and new tax regimes.
Using our calculator will help you determine the best tax strategy and plan investments accordingly.
Tax slabs in the old tax regime differ according to age classifications.
What is the major difference between the old vs new tax regime?Old tax regime: It offers a variety of deductions and exemptions that can reduce your taxable income and tax liability.
New tax regime: It has lower tax slab rates than the old tax regime, but it does not allow many of the deductions and exemptions available under the old regime.
Which tax regime is more beneficial?Whether the old or new tax regime is better for you depends on your individual circumstances, such as your income level, investments, and expenses.
To determine which tax regime is more beneficial, you need to compare your tax liability under the two regimes. You can use our simple and easy-to-use tax calculator to make a more informed decision.
Is it possible to switch between the old and new tax regimes?What is tax rebate?A tax rebate is a form of tax relief provided by the government for individuals with lower incomes. If an individual's income falls below the prescribed limit, the amount of tax payable is reduced accordingly. In other words, the tax liability for such individuals is considered as 0.
For the financial year , the income limit for tax rebate was ₹ 5 lakhs in both the old and new tax regimes. However, for FY , the income limit is ₹ 5 lakhs in the old regime and ₹ 7 lakhs in the new regime.
Why is capital gain not considered in this calculation?Can I use this income tax calculator for payment of taxes?Should I input my CTC in the salary input field?What shall I enter in the deduction or exemption field?Section 10(13A) - HRA exemption
Section 80C (Life insurance premium, ELSS, PPF, EPF, etc)
Section 80D (Health insurance premium)
Section 80CCD (Self NPS investment)
Section 24(b) - Interest on self occupied home
Other Chapter VIA deductions
The Old vs New Tax Regime Calculator is provided for the purpose of awareness and ease of calculation. It is not intended to provide any advice for your specific taxation requirements. For personalised tax-related queries, please consult your tax consultant or qualified financial advisor.
Tax planning varies for individuals based on personal financial requirements. It should be a part of a comprehensive personal financial plan.
The old and new tax regimes are two different ways to calculate income tax in India. The old regime has been around for many years, while the new regime was introduced in the Union Budget 2020-21.
Old Tax Regime: Under this system, individuals can reduce their taxable income through various deductions and exemptions. Deductions are available for investments in areas like Provident Fund, insurance premiums, and health insurance.
Although there are deductions, tax rates are relatively higher. People might choose this system if they have many deductions that can lower their taxable income.
New Tax Regime: This system offers lower tax rates but with fewer deductions and exemptions. The goal of the new system is to simplify taxes and reduce the overall tax burden. Individuals with fewer deductions and those who prefer a simpler tax structure may opt for this regime. People who choose this system won't qualify for many deductions available in the old regime.
That is why it is important to compare the tax payable in the old vs new regime using the income tax calculator.
India's income tax landscape recently experienced a significant shift with the introduction of a new tax regime alongside the existing old tax regime. These two systems differ fundamentally in their tax rate slabs and available deductions and exemptions, posing important implications for taxpayers' financial planning. The differences in tax rates and their effects on various income groups in India are given below.
Old Tax Regime: The old tax regime featured a multi-slab structure with higher tax rates, applicable to individuals based on their age for financial year and .
For age upto 59 years
For age between 60-79 years
For age 80 and above 80 years
Surcharge: In addition to the aforementioned tax liabilities, a surcharge is applicable when the taxable income exceeds ₹50 lakh. The surcharge rates under the old regime are as follows:
For instance, on a taxable income of ₹60 lakh, your initial income tax is ₹16,12,500. Since the taxable income exceeds ₹50 lakh, a 10% surcharge (₹1,61,250) will be added to the income tax.
New Tax Regime: The new tax regime aims to simplify the structure and reduce the overall tax burden on individuals. The tax slabs for the new regime are as follows:
For Financial Year
Surcharge: In addition to the aforementioned tax liabilities, a surcharge is applicable when the taxable income exceeds ₹50 lakh. The surcharge rates under the new regime are as follows:
For instance, on a taxable income of ₹60 lakh, your initial income tax is ₹16,12,500. Since the taxable income exceeds ₹50 lakh, a 10% surcharge (₹1,61,250) will be added to the income tax.
For Financial Year
Surcharge: Surcharge rate was reduced in the new regime for the financial year . The updated rates are as follows:
Lower-Income Group: Individuals with lower incomes remain relatively unaffected by tax rates in both the old and new regimes, as a rebate is allowed for those with income up to ₹ 5 lakhs in the old regime and up to ₹ 7 lakhs in the new regime.
Middle-Income Group: For individuals in the middle-income bracket who invest in tax-saving products, their taxable income could be lower in the old tax system. However, if they don't have any exemptions or deductions, they might still save on taxes due to the lower tax slab rates in the new system compared to the old one.
High-Income Group: High-income individuals face a consistent 30% tax rate in both regimes, but they might lose out on deductions and exemptions in the new regime, making the old regime potentially more favourable.
Any investments, loans, or allowances that you are eligible for tax deduction or exemption under the old tax regime but not under the new tax regime. This includes:
Section 10(13A) - HRA exemption
Section 80C (Life insurance premium, ELSS, PPF, EPF, etc)
Section 80D (Health insurance premium)
Section 80CCD (Self NPS investment)
Section 24(b) - Interest on self occupied home
Other Chapter VIA deductions
*Only NPS contributions made by the employer are allowed as a deduction in the new regime.
Understanding the deductions that are no longer applicable in the new tax regime is crucial for taxpayers to make informed financial decisions. Being aware of these exclusions helps individuals and businesses plan their finances effectively under the revised tax structure.
Marginal relief is a provision in income tax that addresses situations where the surcharge on income tax significantly exceeds the increase in income. This mechanism ensures a more balanced and proportionate taxation structure. Let's break down the concept with an example:
Initial Scenario:
Income: ₹50 Lakhs
Income Tax Payable: ₹13,12,500
With Increase of ₹50,000 in Income:
New Income: ₹50.50 Lakhs
New Tax Payable: ₹14,60,250
(Income Tax: ₹13,27,500 + Surcharge: ₹1,32,750)
Difference Payable without Marginal Relief:
Increase in Tax: ₹1,47,750
(Initial - New Tax Payable: ₹14,60,250 - ₹13,12,500)
Marginal Relief Application:
Marginal Relief Provided: ₹97,750 (Increase in Tax: ₹1,47,750 - Increase in Income: ₹50,000)
Revised Surcharge: ₹35,000
(Original Surcharge: ₹1,37,250 - Marginal Relief: ₹97,750)
In summary, marginal relief is a mechanism to prevent the total tax payable, including surcharge, from increasing too much when there is a relatively small increase in income. It aims to make the taxation more proportionate to the actual increase in income.
Taxpayers under the new tax regime can claim specific deductions. Here are the deductions available:
Employer contributions to the National Pension System (NPS) account under section 80CCD(2).
Deduction for interest paid on housing loans for a rented-out property under section 24(b).
Interest paid on the housing loan is deductible from the rental income, reducing taxable income.
Deduction for gratuity received in a lifetime, capped at ₹ 20 lakhs for non-government employees.
Tax exemption for monetary benefits in voluntary retirement, up to ₹ 5 lakh.
Tax benefit of ₹ 3 lakh for leave encashment on retirement.
Individuals or Hindu Undivided Family (HUF) taxpayers have the flexibility to choose between the old and new tax regimes based on their specific financial circumstances and income sources.
The process of switching between these regimes can occur either on a yearly basis or as a one-time option, depending largely on the source of income during the financial year.
Income Involving Business or Professional Activities: If an individual or HUF earns income from a business or profession and opts for the new tax rates for a specific financial year, these rates will continue to apply for subsequent years. However, taxpayers in this category have a singular opportunity to switch back to the old tax regime in their lifetime, provided their circumstances change. This one-time switch-back option remains available unless the taxpayer no longer has any income from a business or profession.
Income Excluding Business or Professional Activities: Individuals or Hindu Undivided Families (HUFs) without income from business or profession have the flexibility to choose their preferred tax regime annually. In the case of salaried individuals, employers are responsible for deducting taxes based on the chosen regime. However, employees should inform their employers about their preferred tax regime at the beginning of the financial year for accurate Tax Deducted at Source (TDS) deductions and to avoid discrepancies between the Form 16 data shared by the employer with the income tax department and for filing Income Tax Returns (ITR).
Furthermore, taxpayers can adjust their tax regime choice at the time of filing their personal tax return.
Objectives of the New Tax Regime:
Simplify the Tax System: The new tax regime aimed to simplify the intricate Indian tax system by eliminating complexities, including numerous deductions and rebates.
Reduce Tax Compliance Burden: Streamlining the tax structure was geared towards easing the compliance burden on taxpayers, simplifying calculations and the filing of ITRs.
Lower Overall Tax Burden: Lowering tax rates across income slabs was a core objective, reducing the overall tax burden on individual taxpayers.
Promote Tax Transparency: The new regime sought to enhance transparency by eliminating certain exemptions and deductions prone to misuse or tax avoidance.
Benefits of the New Tax Regime:
Lower Tax Rates: The new regime introduced lower tax rates, reducing tax liabilities and providing more disposable income for savings and investments.
Easier Compliance: Reduced complexity in the tax system made compliance more straightforward, enabling taxpayers to calculate their tax liability with greater ease.
Annual Choice: Taxpayers gained the flexibility to choose between the old and new regimes annually, enabling adjustments in tax planning based on changing financial circumstances.
The tax calculation under the old and new regimes for capital gains does not have a major impact. Only short-term capital gains (other than on equities/equity-oriented funds) are taxed at slab rates, which might be affected due to the old vs new regime.
Additionally, Chapter VIA deductions (Section 80C, 80D, etc.) are allowed from the Capital Gains, which might reduce it below the threshold of ₹ 2.5 lakhs, thereby reducing the amount of capital gains chargeable to tax. However, this will only impact those with capital gains income and no other income above ₹ 2.5 lakhs.
In the new tax regime, a loss from house property is not allowed to be set off against income from other heads like salary, business profession, other income, or capital gains.
However, intra-head set-off of loss from one house property against gain from another house property is allowed. Other than this, no other set-off provisions are impacted when comparing the old versus new regime.
Regarding the provision for carry forward, only depreciation from business income is not allowed to be carried forward in the new regime. There is no other major impact on rules related to carry forward in the comparison of the old vs new regime.