ITR Calculator

New vs Old Tax Regime

The New Tax Regime is the default from FY 2023-24 onward. It offers lower slab rates but strips away most deductions.

New Regime key points:

• Zero tax up to ₹4,00,000
• 5% on ₹4L–8L, 10% on ₹8L–12L, 15% on ₹12L–16L, 20% on ₹16L–20L, 25% on ₹20L–24L, 30% above ₹24L
• Standard deduction: ₹75,000
• Section 87A rebate: up to ₹60,000 (zero tax up to ₹12L taxable income)
• Salaried employees effectively pay zero tax up to ₹12,75,000 gross salary [citation:5]

Old Regime key points:

• Zero tax up to ₹2,50,000 (₹3L for 60-80, ₹5L for 80+)
• 5% on ₹2.5L–5L, 20% on ₹5L–10L, 30% above ₹10L
• Standard deduction: ₹50,000
• All deductions (80C, 80D, HRA, 24b) available

Which Regime Should You Choose?

The old regime becomes beneficial only when your total deductions exceed a break-even threshold that rises with income.

• ₹7.5 Lakh salary: New regime usually wins (rebate applies) [citation:2]
• ₹10 Lakh salary: Old regime needs ~₹2,00,000 deductions to match [citation:2]
• ₹12.75 Lakh: New regime is tax-free — old cannot match [citation:2]
• ₹15 Lakh salary: Old regime needs ~₹3,25,000 deductions (80C + 80D + HRA) [citation:2]
• ₹25 Lakh+: Break-even ~₹4,00,000; home loan interest (24b) becomes decisive [citation:2]

Rule of thumb: If you claim HRA in a metro and max out 80C + 80D + NPS, old regime may win. Otherwise, new regime is usually better.

Section 80C — ₹1,50,000 Limit

The most popular deduction. Available only under the old regime. Eligible investments include:

• PPF (Public Provident Fund) — 15-year lock-in, EEE status
• ELSS (Equity Linked Savings Scheme) — 3-year lock-in, market-linked
• EPF (Employee Provident Fund) — automatic salary deduction
• Life Insurance Premium — for self, spouse, children
• NSC (National Savings Certificate) — 5-year term
• 5-year Tax-Saving FD — bank fixed deposit
• Home Loan Principal Repayment
• Children’s Tuition Fees — max 2 children

Tip: EPF contribution alone often fills a large portion. Additional investments help reach the full ₹1.5L.

Section 80D — Health Insurance

Deduction for health insurance premiums and preventive health check-ups.

• Self & Family: up to ₹25,000 (₹50,000 if you are a senior citizen)
• Parents: additional up to ₹25,000 (₹50,000 if parents are senior citizens)
• Maximum combined: ₹1,00,000 (if both you and parents are seniors)
• Preventive health check-up: up to ₹5,000 within the above limits

Tip: Pay premiums via digital modes to ensure smooth claim. Cash payments are not eligible except for preventive check-ups.

Section 80CCD — NPS Benefits

The National Pension System offers three distinct deduction windows:

• 80CCD(1): Your contribution, up to 10% of salary (Basic + DA), within the ₹1.5L 80C limit
• 80CCD(1B): Additional ₹50,000 over and above 80C — this is the most valuable NPS benefit
• 80CCD(2): Employer’s contribution to NPS — allowed in both regimes, up to 10% of Basic + DA (14% for government employees)

Total potential NPS deduction: ₹1,50,000 (80C) + ₹50,000 (1B) = ₹2,00,000 under old regime.

House Rent Allowance (HRA) Exemption

HRA exemption under Section 10(13A) is calculated as the least of three amounts:

• Actual HRA received from employer
• 50% of Basic + DA (for metro cities: Delhi, Mumbai, Kolkata, Chennai)
• 40% of Basic + DA (for non-metro cities)
• Rent paid minus 10% of Basic + DA

Example: Basic = ₹6L, HRA = ₹3L, Rent = ₹2.4L (non-metro). Exemption = min(3L, 2.4L, 2.4L − 60K) = ₹1,80,000.

Note: Not available in the new regime. If you don’t receive HRA but pay rent, Section 80GG applies (up to ₹60,000/year).

Section 24(b) — Home Loan Interest

Deduction for interest paid on home loan for a self-occupied property.

• Maximum deduction: ₹2,00,000 per year
• For let-out properties: No upper limit, but loss from house property is capped at ₹2L per year against other income
• Principal repayment qualifies for Section 80C (within ₹1.5L limit)
• First-time buyers may claim additional ₹1.5L under Section 80EEA (if eligible)

Note: Under the new regime, interest on home loan for self-occupied property is not deductible. However, for let-out properties, interest is still deductible.

TDS, Form 16 & Refunds

TDS (Tax Deducted at Source): Your employer deducts tax monthly based on the regime you declare. If no regime is declared, the new regime is assumed [citation:7].

Form 16: Your employer issues this TDS certificate. It contains salary details and tax deducted. Under the new Income Tax Act 2025, Form 16 is replaced by Form 130 from April 2026 [citation:9].

Refund process:

• Download Form 26AS and AIS from the e-filing portal
• Cross-check TDS with Form 16
• If TDS > actual tax, you get a refund after filing ITR
• Refunds are credited to your pre-validated bank account

Example: ₹20L salary, TDS ₹1,90,000, actual tax ₹1,86,160 → refund ₹3,840 [citation:1]

Which ITR Form to File?

ITR-1 (Sahaj): For resident individuals with total income up to ₹50 Lakh from:

• Salary or pension
• One house property
• Other sources (interest, dividend)
• Agricultural income up to ₹5,000
• LTCG under Section 112A up to ₹1,25,000

ITR-2: Required if you have:

• Income above ₹50 Lakh
• Capital gains (short-term or long-term above ₹1.25L)
• More than one house property
• Foreign income or assets
• Director in a company or unlisted equity shares
• Brought-forward losses

Note: Even ₹500 short-term capital gain disqualifies ITR-1 [citation:18].

Surcharge & Health Education Cess

Surcharge applies on tax when income exceeds ₹50 Lakh:

• ₹50L–₹1Cr: 10% of tax
• ₹1Cr–₹2Cr: 15% of tax
• ₹2Cr–₹5Cr: 25% of tax
• Above ₹5Cr: 37% (old regime) / 25% (new regime) [citation:12]

Health & Education Cess: 4% on (tax + surcharge), applicable to all taxpayers regardless of income level.

Marginal Relief: If income just exceeds ₹50L, ₹1Cr, etc., tax is capped so that the additional tax does not exceed the additional income.

Section 87A Rebate — Zero Tax Explained

Under the new regime, resident individuals with taxable income up to ₹12,00,000 get a rebate of up to ₹60,000, making their tax liability zero [citation:5].

For salaried employees: After the ₹75,000 standard deduction, this means zero tax up to ₹12,75,000 gross salary [citation:5].

Marginal Relief: If taxable income is slightly above ₹12L (e.g., ₹12,10,000), the tax payable is capped at the excess amount (₹10,000), not the full slab tax. Marginal relief applies up to approximately ₹12,70,588 [citation:5].

Example: Taxable income ₹12,50,000 → excess = ₹50,000. Slab tax would be ~₹67,500, but marginal relief caps it at ₹50,000.

Important Dates & Deadlines

Financial Year (FY): April 1 to March 31 — the period in which you earn income.

Assessment Year (AY): The year following FY in which the income is assessed. FY 2025-26 = AY 2026-27.

ITR Filing Deadline:

• July 31: For salaried individuals (non-audit cases)
• Belated Return: December 31 with penalty up to ₹5,000
• Updated Return (ITR-U): Within 24 months from end of AY, with additional tax

Advance Tax: If total tax liability > ₹10,000, you must pay in instalments: 15% by June 15, 45% by Sept 15, 75% by Dec 15, 100% by March 15.

Documents Checklist for ITR Filing

Essential documents:

• Form 16 / Form 130 from employer
• Form 26AS and AIS from e-filing portal
• Bank account details (pre-validated for refund)
• PAN and Aadhaar

If claiming deductions:

• 80C: Investment proofs (PPF passbook, ELSS statement, LIC receipt)
• 80D: Health insurance premium receipts
• NPS: Contribution statement
• HRA: Rent receipts + landlord PAN (if rent > ₹1L/year)
• 24(b): Home loan interest certificate from lender

Tip: Maintain digital copies for 3-4 years in case of scrutiny.

Common ITR Filing Mistakes

1. Regime mismatch: Choose the wrong regime and lose money. Always compare both before filing.

2. Not reporting other income: Savings interest, FD interest, dividend — all must be reported.

3. Forgetting Form 26AS/AIS match: If your reported TDS doesn’t match the government’s records, refunds freeze.

4. Claiming 80C in new regime: Not allowed. Only employer NPS (80CCD2) and standard deduction apply.

5. Missing the filing deadline: Late filing means penalties, loss of carry-forward losses, and delayed refunds.

6. Wrong ITR form: Even small capital gains disqualify ITR-1. Choose carefully.