I-T dept launches calculator for information about new tax regime

Budget 2025 introduced tax exemption for individuals earning up to Rs 12 lakh in a financial year

The Income Tax Department has introduced a tool to compare taxes under the new regime for financial years 2024-25 (FY25) and 2025-26 (FY26). The tool assists individuals assess which income tax regime offers greater benefits based on their income and deductions.

 

Income tax slabs under the new tax regime

 

Rs 0-4 lakh: Nil

 

Rs 4-8 lakh: 5 per cent

 

Rs 8-12 lakh: 10 per cent

 

Rs 12-16 lakh: 15 per cent

 

Rs 16-20 lakh: 20 per cent

 

Rs 20- 24 lakh - 25 per cent

 

Above Rs 24 lakh: 30 per cent

 

 

The new tax regime – the default – offers a basic exemption limit of Rs 3 lakh for all individuals, regardless of age. This means that if an individual's gross income in a financial year does not exceed Rs 3 lakh, no tax is payable. Effective April 1, 2025, this exemption limit will increase to Rs 4 lakh.

 

How to use the calculator:

 

Taxpayers can access the income tax calculator on the Income Tax Department’s website.

 

To use the calculator, individuals have to select their residential status and enter their taxable income, excluding special rate income like capital gains.

 

The calculator will generate a detailed comparison, showing the total tax liability under the existing rates for FY25 alongside total tax payable under Finance Bill 2025 (FY26). It will give the net savings you can enjoy under the new tax regime, helping you make informed financial decisions.

 

“Choosing between the old and new tax regimes for FY26 depends on your income level, financial situation, and ability to claim deductions,” said Amit Bansal, partner at Singhania & Co.

 

“The old tax regime allows various exemptions and deductions such as Section 80C (PPF, EPF, life insurance), Section 80D (medical insurance), HRA, and home loan interest deductions, which can significantly lower taxable income. However, it comes with higher tax rates. On the other hand, the new tax regime offers lower tax rates but eliminates most deductions and exemptions,” he said.