One of the most important questions on my YouTube Channel is How to Calculate Income Tax in India? Whether it is any Financial Year, income tax calculation steps are very simple using the Tax calculator we will see in this article.
Income Tax in India is calculated based on the income level of the individual along with the various investments made. There are currently 2 Tax Regimes in India – Old Tax Regime and New Tax Regime. Old tax regime allows you to make various investments to save income tax under different sections, where as new tax regime does not have much options to save income tax via deductions, but the tax slab rates in new tax regime are lower compared to the old tax regime.
Follow below steps to calculate your Income Tax with Old and New Tax regime and decide which one is better for you.
Income Tax Calculation involves following steps:
- Go to FinCalC Income Tax Calculator here
- Select Financial Year
- Choose Age Group
- Select option between Salaried, Businessman or Pensioner
- Provide Income Details
- Provide Deductions / Investments details
- Your Income Tax will be calculated based on Old and New Tax Regime
Let us check all these steps along with income tax excel calculator with the help of a video below.
- Income Tax Calculation involves following steps:
- Income Tax Slab Rates
- Old Tax Regime vs New Tax Regime – which is better?
- Income Tax Calculation Example – Age 0 to 59 Years
- Income Tax Calculation Example – Age 60 to 79 Years
- Income Tax Calculation Example – Age above 80 Years
- How to use Tax Rebate u/s 87A?
- How to Calculate Income Tax on Salary with Example – Video
- Download Income Tax Excel Calculator
- Frequently Asked Questions
Income Tax Calculation FY 2024-25 Video
As seen in above video, we can easily calculate income tax using excel calculator as well.
Income Tax Slab Rates
Let us now understand what are the different Tax Slab Rates in India.
Different age groups have different tax slab rates for FY 2024-25. Let us check the slab rates based on Age groups:
Tax Slab Rates for age less than 60 Years
Below are the tax slab rates for majority of the salaried employees in India below 60 years of age:
Old Tax Regime
| INCOME | OLD Tax Regime |
|---|---|
| Rs. 0 to Rs. 2.5 Lacs | 0% |
| Rs. 2.5 Lacs to Rs. 5 Lacs | 5% |
| Rs. 5 Lacs to Rs. 10 Lacs | 20% |
| More than Rs. 10 Lacs | 30% |
New Tax Regime
| INCOME | NEW Tax Regime |
|---|---|
| Rs. 0 to Rs. 3 Lacs | 0% |
| Rs. 3 Lacs to Rs. 7 Lacs | 5% |
| Rs. 7 Lacs to Rs. 10 Lacs | 10% |
| Rs. 10 Lacs to Rs. 12 Lacs | 15% |
| Rs. 12 Lacs to Rs. 15 Lacs | 20% |
| More than Rs. 15 Lacs | 30% |
As seen in above tables of Old and New Tax Slab rates, new tax regime are having reduced tax slab rates for various income brackets. But it comes with a condition.
You cannot claim deductions or investment amount in new tax regime, but you can do so in old tax regime to save income tax.
We will check the income tax calculation examples in later sections of this article.
Let us now see the Tax slab rates for age between 60 to 79 years.
Tax Slab Rates for age between 60 to 79 Years
Below are the tax slab rates for age between 60 years to 79 years based on Old and New Tax Regime:
Old Tax Regime
| INCOME | OLD Tax Regime |
|---|---|
| Rs. 0 to Rs. 3 Lacs | 0% |
| Rs. 3 Lacs to Rs. 5 Lacs | 5% |
| Rs. 5 Lacs to Rs. 10 Lacs | 20% |
| More than Rs. 10 Lacs | 30% |
As seen above, for senior citizens of age between 60 years to 79 years, no tax is applicable for income up to Rs. 3 Lacs compared to the limit of Rs. 2.5 Lacs when someone is less than 60 years of age.
This is the benefit given to senior citizens with Old Tax Regime as they enter into their retirement phase.
But as far as New Tax Regime is concerned, there is no such benefit to any age groups apart from reduced tax slab rates for all age groups.
Let us check New Tax Regime slab rates for senior citizens for age between 60 years to 79 years.
New Tax Regime
| INCOME | NEW Tax Regime |
|---|---|
| Rs. 0 to Rs. 3 Lacs | 0% |
| Rs. 3 Lacs to Rs. 7 Lacs | 5% |
| Rs. 7 Lacs to Rs. 10 Lacs | 10% |
| Rs. 10 Lacs to Rs. 12 Lacs | 15% |
| Rs. 12 Lacs to Rs. 15 Lacs | 20% |
| More than Rs. 15 Lacs | 30% |
As seen in above table, new tax regime slab rates are same compared to the new slab rates for people of age below 60 years (non senior citizens).
As mentioned earlier, no deductions or investments are allowed to be claimed with New Tax Regime here as well.
Let us now check Tax Slab Rates for super senior citizens that belong to age above 80 years.
Tax Slab Rates for age above 80 Years
Below are the tax slab rates for super senior citizens of age above 80 years:
Old Tax Regime
| INCOME | OLD Tax Regime |
|---|---|
| Rs. 0 to Rs. 5 Lacs | 0% |
| Rs. 5 Lacs to Rs. 10 Lacs | 20% |
| More than Rs. 10 Lacs | 30% |
As can be seen above, 5% tax slab is not present for super senior citizens and they don’t have to pay income tax on income up to Rs. 5 Lacs in financial year.
This is the benefit given to super senior citizens as they are living in their post retirement phase.
Let us now see tax slab rates based on new tax regime for super senior citizens.
New Tax Regime
| INCOME | NEW Tax Regime |
|---|---|
| Rs. 0 to Rs. 3 Lacs | 0% |
| Rs. 3 Lacs to Rs. 7 Lacs | 5% |
| Rs. 7 Lacs to Rs. 10 Lacs | 10% |
| Rs. 10 Lacs to Rs. 12 Lacs | 15% |
| Rs. 12 Lacs to Rs. 15 Lacs | 20% |
| More than Rs. 15 Lacs | 30% |
As seen in above new tax regime, there is no change even thought for people above 80 years of age. This is the specialty of New Tax Regime.
Even though the new tax regime has reduced tax slab rates, people of all age groups (or gender) have to pay tax based on same slab rates in new tax regime and by forgoing all deduction options and investments.
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So far we have seen both Old and New Tax Regime. But why do we have 2 regimes and how do we calculate our income tax based on these regimes?
Let’s decode.
Old Tax Regime vs New Tax Regime – which is better?
We have seen tax slab rates for various age groups based on Old Tax Regime and New Tax Regime.
We have the option to choose between them. So we can choose one tax regime out of these two and calculate our tax liability.
Now you will think that since New Tax Regime are having reduced tax slab rates, you will always choose new tax regime to calculate and pay income tax. But that is not the case always.
It depends on your income and investments, to properly analyze your yearly income and investments and select the tax regime with required calculations.
Even though old tax regime is having high slab rates, still you can end up paying less income tax with old tax regime. How?
Remember, that investment options and deductions can be claimed using old tax regime which will help us to save income tax.
So by proper planning of investments and deducting required amount from taxable income, we can easily save lot of income tax using Old Tax Regime.
Which Tax Regime you should choose?
Now the very common question is, which tax regime you should choose so that you have to pay less income tax?
The answer is very simple. You should choose Old Tax regime if your annual income is up to Rs. 15 Lacs and make appropriate investments mentioned here in video to save income tax.
If your income is above Rs. 15 Lacs, then it is wise to choose new tax regime to pay your income tax as no amount of investments will help you to save income tax after Rs. 15 Lacs, due to limits of all investment options mentioned here.
I have also covered some more points in this below video on Old vs New Tax Regime comparison.
Old Tax Regime vs New Tax Regime Comparison – Video
Let us now move to income tax calculation examples using our online tax calculator for different age groups.
Income Tax Calculation Example – Age 0 to 59 Years
Let’s say for example, Annual Income (Salary) = Rs. 8 Lacs, Investments = Rs. 0. So calculating Income Tax using our online Tax calculator, we get income tax as:
- Old Tax Regime = Rs. 65,000
- New Tax Regime = Rs. 23,400
Below is the screenshot with calculations:
In above calculations, Standard Deduction of Rs. 50,000 and Rs. 75,000 is already considered in both old and new tax regimes respectively and appropriate tax is calculated. No such deduction is considered for new tax regime since these deductions are not allowed in new tax regime.
And seeing the income tax with both tax regime, we should go with New tax regime as we’ll be paying less income tax compared to Old Tax regime, without making any investments.
But you can make investments of Rs. 1,50,000 under Section 80C that includes options like Public Provident Fund, Employee Provident Fund, 5 year Fixed Deposits, Life Insurance premiums, etc. and Rs. 50,000 under Section 80CCD(1B) which includes NPS (National Pension System) under old tax regime and mention same in our calculator’s deductions section, to save income tax.
Let’s calculate income tax for senior citizens.
Income Tax Calculation Example – Age 60 to 79 Years
Let’s take same example as above, Annual Income (Pensioner) = Rs. 8 Lacs, Investments = Rs. 0. So calculating Income Tax using our online Tax calculator, we get income tax as:
- Old Tax Regime = Rs. 62,400
- New Tax Regime = Rs. 23,400
Below is the screenshot with calculations:
So over here as well, you will pay less income tax with new tax regime, even though standard deduction of Rs. 50,000 is considered in Old Tax Regime, but there is no other deductions.
Let’s say we invest Rs. 1,50,000 and Rs. 50,000 under Section 80C schemes and Section 80CCD(1B) respectively, so we get following numbers:
- Old Tax Regime = Rs. 20,800
- New Tax Regime = Rs. 23,400
Below is the calculations screenshot:
So we can save a lot of income tax with Old tax regime here. Similarly we can make more investments and save more income tax!
Let us see income tax calculation examples for super senior citizens now.
Income Tax Calculation Example – Age above 80 Years
We’ll consider same example of Rs. 8 Lacs annual income as pension, no investments. So calculating income tax with these considerations, we get:
- Old Tax Regime = Rs. 52,000
- New Tax Regime = Rs. 23,400
Below is the calculations screenshot:
You should choose new tax regime in this case and pay less income tax.
Let’s say you make investment of Rs. 1,50,000 in section 80C, we get below numbers:
- Old Tax Regime = Rs. 20,800
- New Tax Regime = Rs. 23,400
As seen above, you’ll pay less income tax with old tax regime after making investment of Rs. 1.5 Lacs in section 80C.
And in this way you should plan and invest in required investment options in a financial year to reduce your tax liability.
One important point to notice here is while calculating income tax using new tax regime, the income tax is same irrespective of the age group you belong to.
This is because the tax slab rates are same in new tax regime for all age groups.
How to use Tax Rebate u/s 87A?
Tax Rebate u/s 87A is one of the important tax rebate sections that helps us to pay Zero Income Tax.
According to this rebate, if your taxable income is below Rs. 5 Lacs, you get a maximum tax rebate of Rs. 12,500. Now if your income is Rs. 5 Lacs, your tax is Rs. 12,500, which gets cancelled using this tax rebate that is applied automatically, and you end up paying Zero income tax.
This condition is applicable in both old and new tax regime.
But what if your income is above Rs. 5 Lacs? It’s simple, you don’t get this tax rebate, but only according to old tax regime.
With old tax regime, you can make various investments and claim deductions to get your taxable income below Rs. 5 Lacs and use this tax rebate u/s 87A.
You can also watch below video on how to use this tax rebate to pay zero income tax with examples:
Tax Rebate u/s 87A Examples – Video
And below video shows examples of how to calculate income tax on salary.
More information on how to calculate income tax on salary with examples here.
How to Calculate Income Tax on Salary with Example – Video
Download Income Tax Excel Calculator
Please fill below details to download income tax excel calculator for FY 2024-25. Also, you can watch video at the top of this article or in this income tax calculation article to know how to use this income tax excel calculator.
Frequently Asked Questions
How much Tax do you pay on 10 Lakh Salary?
Based on the income tax calculator, you pay Rs. 1,04,000 as tax with Old Tax Regime or Rs. 44,200 as tax with New Tax Regime. It’s better to use New Tax Regime to pay income tax here.
What is Tax Rebate u/s 87A?
Tax Rebate u/s 87A will be applicable to us only when our taxable income is below Rs. 5 Lacs in a financial year. According to tax rebate u/s 87A, we get tax rebate of maximum Rs. 12,500.
This tax rebate will cancel the income tax for our income between Rs. 2.5 Lacs to Rs. 5 Lacs. Interestingly, Tax Rebate u/s 87A will be applicable on both Old and New Tax Regime.
With New Tax Regime, you cannot use deductions whereas with Old Tax Regime, we can use deductions to reach taxable income below Rs. 5 Lacs.
Which Tax Regime you should choose?
Based on our analysis, we should choose new Tax Regime if income is above Rs. 15 Lacs and Old Tax Regime if income is below Rs. 15 Lacs.
If you want to make use of deductions or investments, we should use Old Tax Regime, provided you pay less income tax with Old Tax Regime compared to New Tax Regime.
What is the best method to calculate Income Tax?
You can use the FinCalC online income tax calculator to easily calculate income tax.
Other ways are to use the excel calculator and android app on your phone.
What is Standard Deduction? How to claim it?
Standard Deduction is a flat deduction of Rs. 50,000 available for salaried employees and pensioners in old tax regime. This deduction limit is Rs. 75,000 in new tax regime for salaried employees in FY 2024-25.
While calculating income tax with Old Tax Regime, standard deduction will be automatically applied in the online income tax calculator and android app. In excel we have to provide it separately under investments options.
Please note that standard deduction is applicable for both – old tax regime and new tax regime.
Some more Reading
- TDS on Salary Calculation
- Short Term Capital Gains Taxation
- HRA Exemption Calculation in Excel
- Home Loan Prepayment Calculator Excel
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Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
- Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
- Enter estimated Investments to check income tax with Old and New Tax Regime
- Save income tax details and track regularly
- Know how much to invest more to save income tax
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