Income Tax Calculator(FY 2025-26)

What Is An Income Tax Calculator?

Income tax calculator is an online tool designed to help you estimate your future income tax based on the tax rate applicable to your income slab. It's a quick and easy way to get an idea of how much tax you may have to pay and the strategies you can apply to save tax.

An income tax calculator will use information such as your income, exemption amounts, allowable deductions, and the tax regime in which you file your return to calculate your prospects for paying income tax. It considers applicable slab rates, surcharge, cess, and benefits available to individuals.

The Angel One Income Tax calculator is aligned with the updates announced in the Union Budget for FY 2025-26 and AY 2026-27.

How to Use the Angel One Online Income Tax Calculator for FY 2025-26 (AY 2026-27)?

Here are the steps for using a tax calculator:

• Step 1: Select the fiscal year for which you wish to calculate your taxes.

• Step 2: Choose your age as the tax slabs vary for senior citizens under the old regime.

• Step 3: Click "Continue".

• Step 4: Enter your gross salary before deductions. Exempt allowances such as HRA are applicable only under the old tax regime and should be entered separately if relevant.

• Step 5: In addition, you need to enter other information such as interest income from savings, rental income, and home loan interest paid, while you are renting or self-occupying.

• Step 6: To receive income from digital assets, you must enter your net income (i.e., sales minus costs).

• Step 7: Click "continue" again.

• Step 8: You will also be able to enter your deductions, such as 80C, 80D, 80G, 80E, or 80TTA tax-saving investments if they are relevant to you.

• Step 9: Click "calculate" to calculate your tax liability and compare the old and new methods.

Budget 2026 Updates on Income Tax

The Union Budget 2026 introduces some changes, marks a historic shift with the implementation of the New Income Tax Act, 2025, which officially replaces the 1961 Act from April 1, 2026.

While the Budget maintains the tax slab structure introduced in 2025, it focuses on simplifying compliance and reducing the tax burden on specific foreign transactions. Here are the key highlights:

1. Implementation of the New Income Tax Act, 2025

The New Income Tax comes into effect from April 1, 2026. The aim of the new act is to simplify taxation. Key features include:

• Single "Tax Year" Framework: The distinction between "Previous Year" and "Assessment Year" is being phased out in favour of a unified tax year system.

• Simplified Forms: Redesigned ITR forms will be notified shortly to ensure easy compliance for ordinary citizens.

2. Income Tax Slabs (No Change for FY 2026-27)

The tax slabs for the New Tax Regime (default) remain unchanged from the 2025 reforms.

3. Major TCS Reductions

A significant highlight of Budget 2026 is the changes in Tax Collected at Source (TCS), aimed at helping taxpayer cash flow:

• Overseas Tour Packages: The rate has been reduced to a flat 2% (down from the 5%/20% split), with no minimum threshold.

• Education & Medical Remittances: The rate on foreign remittances for education (not from loans) and medical treatment is also reduced to 2% from 5%.

4. Extended Filing & Compliance Windows

• Revised Returns: The deadline for filing revised returns has been extended from December 31 to March 31 of the assessment year (with a nominal fee).

• Staggered Due Dates: While the due date for individual ITR-1/2 filers is July 31, non-audit business cases and trusts now have an extended deadline of August 31.

• Updated Returns (ITR-U): Taxpayers can now update returns even after reassessment has begun, provided they pay an additional 10% tax.

5. Relief for Small Taxpayers & NRIs

• Automated Nil/Lower TDS: A new rule-based process enables small taxpayers to obtain lower or nil deduction certificates without submitting manual applications to an assessing officer.

• Motor Accident Claims: Interest awarded by the Motor Accident Claims Tribunal to individuals is now exempt from income tax, and the corresponding TDS has been removed.

• NRI Property Transactions: For property purchases from non-residents, buyers can now use a PAN-based challan instead of needing a TAN (Tax Deduction Account Number).

6. Securities & Buybacks

• Share Buybacks: All proceeds from buybacks will now be taxed as Capital Gains in the hands of the shareholders.

• STT Hike: The Securities Transaction Tax (STT) on Futures has been raised to 0.05% and on Options to 0.15%.

Revised Income Tax Slabs Under New Regime For FY 2025-2026 (AY 2026-2027)

The new regime slabs for FY 2025-26 offer lower rates and higher exemptions than the prior year.

Based on the above, the tax rates and slabs are as follows:

Which Income Sources are Exempted From Tax Under the New Regime?

Under the New Tax Regime, several traditional exemptions remain intact, ensuring key income sources stay tax-free.

Below is a list of important tax exemptions included in the new laws:

• Agricultural Income: Income from agricultural production is completely tax-exempt under Section 10(1).

• Gratuity: Gratuity payments to employees, subject to specified limits, are exempt from taxes under Section 10(10).

• Withdrawals from a Provident Fund: Amounts withdrawn from a provident fund after meeting the prescribed conditions are tax-free.

• Leave Encashment: Leave encashment paid to an employee at the time of retirement will also be exempt from taxation; however, a limit applies.

• Compensation for Natural Disaster Relief: Relief payments received from the government for natural disaster relief will be tax-free.

• Minor Child (parents) Income: Parents may receive up to ₹1,500 in tax-free income for each child until the age of 18.

• Tax-Free Bonds: Interest earned from tax-free bonds will be exempt from taxation.

When calculating tax liabilities using the new system tax calculator, mention whether or not these exemptions apply to you.

How to Calculate Income Tax on Salary?

In the new tax structure for the financial year 2025-26, the government of India introduced 2 different tax structures for calculating income tax.

The old tax structure and the new tax structure. The new tax structure is the default and has lower tax rates and fewer deduction options than the former.

The steps to calculate an individual's income tax in an efficient manner.

• Start with the gross salary amount (basic + allowances + bonuses).

• Subtract standard deduction: ₹75,000 (new regime).

• Add other income; deduct eligible items (new: employer NPS up to 14%; old: HRA, 80C, etc.). Apply slabs, rebate if <=₹12 lakhs (up to ₹60,000), add 4% cess, reconcile with TDS.

Example: ₹15 Lakh Salary

With a gross salary of ₹15,00,000 and standard deduction of ₹75,000, the taxable income will be ₹14,25,000. The tax will be as follow:

Note: There is no rebate as taxable income is more than ₹12,00,000.00.

How to Calculate Income Tax for the Salaried?

Your total income is composed of your basic salary, HRA, special allowance, transport allowance, and any other allowance. Some of these components of your total income, such as travel allowance and telephone bill allowance, are eligible for exemptions. If you are living in a rented property, you can claim an exemption in HRA. Moreover, a standard deduction of Rs. 50,000 is also given, which you can claim irrespective of the actual amount spent on travel or medical allowances. By entering the details, the calculator will demonstrate the total tax liability of the individual.

Old vs The New Tax Regime

The government introduced the new tax regime in 2020. It has altered the tax slabs to offer taxpayers concessional tax rates. However, individuals filing under the new tax regime are not eligible for the various exemptions under HRA, LTA, 80C etc. To switch from the old to the new tax regime, the decision should be based on your income slab and the exemptions you are eligible for. Here are some ground rules you can apply:

• If your deductions are less than ₹1.5 lakh, the new tax regime is more beneficial

• If the total deduction amount is more than ₹3.75 lakh, the old regime will give you higher tax exemptions

• For exemptions between ₹1.5 to ₹3.75, you can choose either a new or old tax regime depending on your income

Benefits of Using An Income Tax Calculator

The online income tax calculator offers several benefits, making it easier for individuals to manage their finances and tax obligations. The key advantages of income tax calculators are the following:

• Accuracy: The calculator performs complex tax calculations accurately, eliminating the chances of manual errors.

• Time-saving: It saves valuable time by automating the tax calculation process and eliminating the need for manual calculations.

• Compare scenarios: By adjusting variables such as deductions, exemptions, and filing status, the user can explore different tax scenarios and make informed financial decisions.

• Financial planning: The income tax calculator helps financial planning by providing a clear understanding of expected tax payments. It enables individuals to plan their budgets effectively and be prepared for their tax obligations.

• Convenience: The calculator is accessible anytime from anywhere, enabling individuals to calculate their tax liabilities without relying on tax professionals.

• Cost savings: You can use the calculator to identify potential deductions or credits you may have missed, potentially reducing tax liability and saving money.