INCOME TAX - FY 2025-26

INCOME TAX - FOR FY 2025-26 (AY 2026-27)- CURRENT FOR ITR JUL-26

This post is in continuation of our last post CLICK HERE TO OPEN.

For Financial Year 2025-26 (AY 2026-27), the New Tax Regime (Section 115BAC) remains the default option, featuring lower tax rates but no deductions. Income up to ₹4 lakh is tax-free, with a rebate under Section 87A making income up to ₹12 lakh effectively tax-free. The ₹75,000 standard deduction applies for salaried individuals/Pensioners. For the Family pensioners opting for NEW REGIME the deduction under Sec 57(III) has been increased from 15000 to 25000 or 30% of Family pension which ever is lower. The New Regime has further been made more attractive and beneficial for a larger segment of Middle Class Tax payers.

 As regards the choice of OLD Vs NEW one need to specifically calculate the payable taxes under both regimes after taking into consideration the entitled deductions in the REGIMES. No thumb Rule can be made for this as the balance tilts with the over all Taxable Income of the individuals

MANUAL CALCULATION OF INCOME TAX - NEW REGIME

Even though many "On line Tools" are available to calculate the Tax under the two Regimes for comparison for exercising option while filing the ITR, one can convenienly calculate manually as well

Before we get on to the the methodology, we need to firstly work out our Gross Total Income from all sources as usual, Secondly jot down your deductions applicable for OLD REGIME as we have been doing earlier (help is also available in the last years post in this regard) and Thirdly the applicable deduction for REVISED NEW REGIME if you are a salaried employee or a pensioner. as explained above. These three are the only figures you need to know to proceed further as explained here.

Having arrived at the Taxable Income (TI) let us calculate the basic tax before edn cess of 4% 

Under the NEW REGIME, the tax slabs as given below, have been revised to make it more attractive being less taxing than the OLD REGIME, that stands unchanged for the last many years. Please note the figures shown against the slabs for manual calculation of tax before application of Cess @ 4% on Taxes

Up to ₹4,00,000:        -   NIL

• ₹4,00,001 - ₹8,00,000:      5%         Rs 0/-            Plus 5% of (TI Minus 4 Lakh)
• ₹8,00,001 - ₹12,00,000:  10%        Rs 20000/-     Plus 10% of (TI Minus 8 Lakh)
• ₹12,00,001 - ₹16,00,000: 15%       Rs 60000/-     Plus  15% of (TI Minus 12 Lakh)
• ₹16,00,001 - ₹20,00,000: 20%       Rs 120000/-   Plus 20% of (TI Minus 16 Lakh)
• ₹20,00,001 - ₹24,00,000: 25%       Rs  200000/-  Plus 25% of (TI Minus 20Lakh)
• Above ₹24,00,000:          30%        Rs  300000/- Plus 30% of (TI Minus 24 Lakh)
NOTE - NO TAX ON INCOME UPTO 12 LAKHS (REBATE SEC 87A).

If the TI is worked out above 12 Lakh , in order to get the tax on TI under new

regime check under which slab (ABOVE 12 LAKH) your TI falls from above.

Use the Primary School Maths of simple Plus, Minus and multiplication as given against slabs to get the Tax on taxable Income under the new regime.

MARGINAL REBATE - Under the NEW REGIME in case your Taxable Income works out to 1201000/- the Tax calculated will be 60000+1000*15% ie Rs 60150/- for an increase of just Rs 1000 above 12 Lakh. Under such an eventuality Marginal Rebate has been introduced under NEW REGIME to limit your payable tax to the amount that exceeds 12 Lakh. In the example cited above the Tax payable will only be Rs 1000/- and not Rs 60150, as such Marginal Rebate that amounts  to (60150 minus 1000) will be Rs 59150/-

As a thum rule if your total Taxable Income is between 12 Lakh and 1270589 then your tax liability is limited to the amount that is above Rs 12 lakh only. OUR OWN ON LINE CALCULATOR FOR NEW AS WELL AS OLD REGIMES FOR COMPARISON

STEPS TO PROCEED FOR AUTO CALCULATIONS:- 1. Calculate your total Gross Income from all sources.
2. Deduct deductions as entitled in New as well as Old Regimes. 

(As already mentioned apart from Standard Deduction of Rs 75000/- for Salaried Tax Payers and Pensioners like us, or Rs 25000/- or 30% of Family Pension which ever is less for Family Pwensioners, no other deductions are valid. However in Old regime a Standard Deduction of Rs 50000/- or Rs 15000/- (or 30% of Family Pension ) which ever is lesss, all other deductions are permitted.)

3.  On deducting the deductions one gets the Taxable Income (TI) separately for the two Regimes. 

4. The tables below separately show calculations for  the two Regimes, here in these tables click the Taxable Income cells for New and Old Regimes and insert the TIs by typing. While typing the default figures should deletele itself, if it does not happen first delete the default figure and then type the calculated Taxable Income figures.

5.  The New Regime has been made much attractive due to low taxation than Old Regime. The tables below as you see the TI, we have given 350000/- deductions over and above the New Regime, Even at this level under New Regime one will pay 130000/- less Income Tax.

6. Hence one can be sure of opting for New or Old Tax Regime after such calculations while filing the ITR in July 2026  .....

 

 

                                            (One Drive GRPS ON LINE TAX CALCTR 2025-27)

7.  Please note that only the cells labelled Taxable Income can only be  changed  by you and all calculations are instantly done in the background and finally the Payable Tax is shown in the lowermost cells.

8  The Old regime above shows tax for Sr Ctz (60 to less than 80 yrs) therefore for below 60 individuals please add Rs  2600/-   to the Total Tax Payable and for Very Sr Ctx , Above 80 yrs deduct Rs 10400/-   from the total payable tax so calculated above, these figures include Cess of 4% as applicable.

9   Please let us know if you have any observations on our post, which we welcome whole heartily, we will endevour to respond with thanks. Kindly click below to post your obsns for our team.

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OLD REGIME - CALCULATIONS MANUALLY -

OLD REGIME SLABS-  Similarly calculate and note down your payable basic income tax under the old regime based on the taxable income as calculated above using the tax slabs (There is no change to the slabs of previous years under old regime) as given below :-

  NOTE -- For senior citizen the first slab of zero I-Tax is  from 0 to 3 Lakh hence the tax on Rs 10 lakh works out to be  Rs  110000/- for senior citizen.  For Super Sr Ctz ie Above 80 yrs there is 0 tax upto 5 Lakh in place of 3 Lakh hence tax on 10 lakh works to Rs 100000/-.  The tax for any amount above 10 Lakh will be 110000 or 100000 plus 30% of the amount above 10 lakh.  

All deductions as hither to fore are allowed  however there is no change to Standard deduction which remains at 50000 for old regime and the rebate under 87A also remains to be no tax up to Taxable income up to Rs five Lakh, where as in New regime they have been enhanced to 12 Lakh and is applicable for FY 2025-26.

 TAX REBATE - Please Note that under the old regime there will be ZERO TAX upto Taxable Income 0f 5 Lakhs owing to rebate in tax is provided under Sec 87A.

       NO MARGINAL RELIEF IS APPLICABLE UNDER OLD REGIME.

CESS 4% on Tax -   To be in addition to the TAXES calculated above under both the regimes. We are not discussing the Surcharge on TAX for income above 50 Lakhs in this post.

BY FLOW CHART - Here again follow the questions and your answers as fiven in the flow chart placed opposite. 

When you reach the final answer just make one multiplication and you will get the Tax liability under the Old Regime. 

The flow chart can be Zoomed  by clicking over it.  

The taxes calcilated are for individuals below 60 yrs of age. here the Sr Ctz (Above 60) should deduct Rs 1250 and Super Sr Ctz (Above 80 Yrs) Rs 12500 from the amt of tax so calculated.

 

The marginal rebate as in New regime is not applicable here.

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SUR CHARGE ON TAX (Both REGIMES)

In case tour taxable Income is between Rs 50 Lakh and 1 Crore, 10% of the Tax so calculated is added to the total tax as the surcharge. It is 15% from 1 to 2 Crores.

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