Can I pay zero tax on ₹12 lakh income?

Yes. For FY 2025-26, a salaried individual with gross income up to ₹12,75,000 can pay zero tax. After ₹75,000 standard deduction, taxable income is ₹12,00,000. The Section 87A rebate of ₹60,000 covers the full slab tax of ₹60,000. Note: this zero-tax benefit applies only to regular income — capital gains are taxed separately.

Income Tax Calculator India 2025-26 — New Regime

Q: How is income tax calculated under the new regime?

Under the new regime, income tax is computed progressively. Taxable income = Gross Income − Standard Deduction − Allowed Deductions (e.g., Employer NPS 80CCD(2)). Slab rates are applied to taxable income, Section 87A rebate is deducted if eligible, and 4% health and education cess is added to the net tax.

Q: What are the new regime slabs for FY 2025-26?

FY 2025-26 new regime slabs: ₹0–4L at nil, ₹4–8L at 5%, ₹8–12L at 10%, ₹12–16L at 15%, ₹16–20L at 20%, ₹20–24L at 25%, above ₹24L at 30%. Standard deduction of ₹75,000 applies for salaried individuals.

Q: What is the Section 87A rebate for FY 2025-26?

For FY 2025-26, the Section 87A rebate is up to ₹60,000 if your taxable income is at or below ₹12,00,000. A salaried individual with gross income up to ₹12,75,000 (₹12L taxable after ₹75K standard deduction) pays zero income tax under the new regime.

Q: What is surcharge in income tax?

Surcharge is an additional levy on income tax for high-income earners. Under the new regime: 10% surcharge applies for income above ₹50L, 15% above ₹1Cr, 25% above ₹2Cr. The new regime caps surcharge at 25% regardless of income. Marginal relief prevents tax from spiking sharply at thresholds.

Q: How is Employer NPS 80CCD(2) different from employee NPS?

Under Section 80CCD(2), the employer's contribution to the employee's NPS account — up to 14% of basic salary — is deductible even under the new regime. This is one of the few deductions available. Employee's own NPS contribution (80CCD(1B)) is NOT deductible under the new regime.

Q: How are capital gains taxed under the new regime?

Capital gains are taxed separately from regular income. STCG on listed equity under Section 111A: 20%. LTCG on listed equity under Section 112A: 12.5% on gains above ₹1.25 lakh. Section 87A rebate does NOT apply to capital gains tax. These rates apply to both FY 2024-25 (post-Budget July 2024) and FY 2025-26.

Financial Year

Employment Type

Gross Annual Income (₹)

Standard Deduction (₹) Auto-applied based on employment type

House Property Income (Let-out) (₹) Net rental income from let-out property

Income from Other Sources (₹) Interest, dividends, gifts, etc.

Employer NPS Contribution 80CCD(2) (₹) Max deductible: 14% of gross salary

Your Tax Estimate

Total Tax Payable

Taxable Income

Estimated Take Home

Slab Tax (before rebate)

Sec 87A Rebate

Effective Tax Rate

Surcharge

Health & Education Cess

Income Breakdown

Slab-wise Tax Breakdown

Slab Range	Income in Slab (₹)	Rate	Tax (₹)

How This Income Tax Calculator Works

This calculator estimates your annual income tax liability under India's new tax regime for either FY 2025-26 (AY 2026-27) or FY 2024-25 (AY 2025-26). The new regime is the default tax regime from FY 2023-24 onwards and features lower slab rates with minimal deductions.

Enter your gross income, select your employment type (Salaried or Self-Employed), and optionally add house property income, other sources, employer NPS, or capital gains. The calculator computes taxable income, applies progressive slab rates, checks eligibility for the Section 87A rebate, computes surcharge where applicable, adds 4% health and education cess, and shows a detailed slab-wise breakdown.

All calculations run locally in your browser. No data is sent to any server. This is an indicative estimate — always verify with your Form 16 or a chartered accountant before filing.

New Regime Tax Slabs

FY 2025-26 (AY 2026-27)

Taxable Income	Rate
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

Standard deduction: ₹75,000 (salaried/pensioners). Section 87A rebate: up to ₹60,000 if taxable income ≤ ₹12,00,000.

FY 2024-25 (AY 2025-26)

Taxable Income	Rate
Up to ₹3,00,000	Nil
₹3,00,001 – ₹6,00,000	5%
₹6,00,001 – ₹9,00,000	10%
₹9,00,001 – ₹12,00,000	15%
₹12,00,001 – ₹15,00,000	20%
Above ₹15,00,000	30%

Standard deduction: ₹75,000 (raised by Budget 2024). Section 87A rebate: up to ₹25,000 if taxable income ≤ ₹7,00,000.

Income Tax Calculation Formula

Taxable Income = Gross Income − Standard Deduction − Employer NPS 80CCD(2)
Slab Tax = Σ (taxable amount in each slab × slab rate)
Tax after Rebate = Slab Tax − Sec 87A Rebate (if eligible)
Surcharge = Tax after Rebate × surcharge rate (if income > ₹50L)
Cess = (Tax after Rebate + Surcharge) × 4%
Total Tax = Tax after Rebate + Surcharge + Cess

Capital gains are computed separately: STCG @20%, LTCG @12.5% above ₹1.25L exemption. Capital gains tax is added before surcharge and cess. Section 87A rebate does not apply to capital gains tax.

Example Calculations (FY 2025-26)

Example 1: Gross ₹12,75,000 — Zero Tax

Standard Deduction: ₹75,000 → Taxable Income: ₹12,00,000

Slab Tax: ₹0 (0-4L) + ₹20,000 (4-8L @5%) + ₹40,000 (8-12L @10%) = ₹60,000

87A Rebate: ₹60,000 (taxable ≤ ₹12L) → Tax after rebate: ₹0 → Cess: ₹0

Total Tax: ₹0

Example 2: Gross ₹15,00,000 — Standard Salaried

Standard Deduction: ₹75,000 → Taxable Income: ₹14,25,000

Slab Tax: ₹0 + ₹20,000 + ₹40,000 + ₹33,750 (12-14.25L @15%) = ₹93,750

87A Rebate: None (taxable > ₹12L) → Cess: ₹3,750

Total Tax: ₹97,500

Example 3: Gross ₹60,00,000 — Surcharge Applies

Standard Deduction: ₹75,000 → Taxable Income: ₹59,25,000

Slab Tax ≈ ₹14,17,500

10% Surcharge (income > ₹50L): ₹1,41,750 (subject to marginal relief)

Cess @4% on (slab tax + surcharge)

Effective tax rate: ~26%

Section 87A Rebate Explained

Section 87A provides a full rebate against slab tax if taxable income is within the prescribed threshold. For FY 2025-26, the threshold is ₹12,00,000 with a maximum rebate of ₹60,000. For FY 2024-25, the threshold is ₹7,00,000 with a maximum rebate of ₹25,000.

Important: The 87A rebate is applied only against slab income tax, not against capital gains tax (STCG or LTCG). If your normal income is within the threshold but you also have capital gains, the rebate reduces only the slab tax component.

For incomes slightly above the threshold (e.g., ₹12,00,001 vs ₹12,00,000), the full slab tax applies without any rebate — creating a sharp tax cliff. Plan your salary structure accordingly.

Surcharge Under the New Regime

Surcharge is an additional tax levied on high-income earners. Under the new regime, the surcharge rates are:

Total Income	Surcharge Rate
Up to ₹50,00,000	Nil
₹50,00,001 – ₹1,00,00,000	10%
₹1,00,00,001 – ₹2,00,00,000	15%
₹2,00,00,001 – ₹5,00,00,000	25%
Above ₹5,00,00,000	25% (capped under new regime)

Marginal relief ensures the additional tax due to surcharge does not exceed the additional income above the surcharge threshold.

Deductions Allowed Under the New Regime

Standard Deduction (Sec 16): ₹75,000 for salaried employees and pensioners. Not available for self-employed.
Employer NPS Contribution (Sec 80CCD(2)): Up to 14% of basic salary. This is one of the most valuable deductions available under the new regime.
NOT allowed: 80C (PF, ELSS, PPF), 80D (health insurance), HRA, LTA, home loan interest on self-occupied property, and most other popular deductions.

Common Use Cases

Annual Tax Planning — Estimate your tax liability at the start of the FY to plan advance tax deposits and avoid interest under Section 234B/234C.
Salary Offer Evaluation — Calculate effective take-home after tax on a new CTC offer before accepting.
NPS Optimization — Check how increasing employer NPS contribution reduces taxable income under the new regime.
Capital Gains Planning — Estimate tax on LTCG/STCG from equity investments before booking profits.
Surcharge Impact — Understand how approaching ₹50L income triggers surcharge and the marginal relief mechanism.
Freelancer Tax Estimation — Self-employed professionals can estimate quarterly advance tax based on projected annual income.

Frequently Asked Questions

How is income tax calculated under the new regime?

Taxable income is computed as Gross Income minus Standard Deduction minus Employer NPS 80CCD(2). Progressive slab rates are applied to get the slab tax. If eligible, the Section 87A rebate reduces the slab tax. Surcharge is added for high incomes. Finally, 4% health and education cess is applied on the net tax plus surcharge.

What are the new regime slabs for FY 2025-26?

FY 2025-26 new regime: up to ₹4L is nil, ₹4–8L at 5%, ₹8–12L at 10%, ₹12–16L at 15%, ₹16–20L at 20%, ₹20–24L at 25%, above ₹24L at 30%. Standard deduction of ₹75,000 applies for salaried individuals.

What is the Section 87A rebate for FY 2025-26?

For FY 2025-26, the Section 87A rebate is up to ₹60,000 if taxable income does not exceed ₹12,00,000. A salaried individual with gross income up to ₹12,75,000 pays zero income tax. Note: the rebate does not apply to capital gains tax.

What is surcharge in income tax?

Surcharge is an additional levy on income tax for high earners. Under the new regime: 10% for income above ₹50L, 15% above ₹1Cr, 25% above ₹2Cr. The new regime caps surcharge at 25% even for income above ₹5Cr. Marginal relief prevents tax from rising sharply at each surcharge threshold.

What deductions are allowed under the new regime?

The new regime allows very few deductions. For salaried individuals, standard deduction of ₹75,000 is allowed. Employer NPS contribution under Section 80CCD(2) up to 14% of basic salary is also deductible. Most other deductions (80C, 80D, HRA, LTA, etc.) are NOT available under the new regime.

How is Employer NPS 80CCD(2) different from employee NPS?

Section 80CCD(2) covers the employer’s contribution to the employee’s NPS account — up to 14% of basic salary — and is deductible under the new regime. Employee’s own NPS contribution (Section 80CCD(1B)) is NOT deductible under the new regime. Maximizing employer NPS is one of the most effective tax-saving strategies available under new regime.

How are capital gains taxed under the new regime?

Capital gains are taxed at flat special rates, separately from regular income. STCG on listed equity under Section 111A is taxed at 20%. LTCG on listed equity under Section 112A above ₹1.25 lakh is taxed at 12.5%. The Section 87A rebate does not apply to capital gains tax. These rates apply from Budget 2024 (July 23, 2024) for both FY 2024-25 and FY 2025-26.

Can I pay zero tax on ₹12 lakh gross income?

Yes, a salaried individual with gross income up to ₹12,75,000 can pay zero income tax under the new regime for FY 2025-26. After ₹75,000 standard deduction, taxable income is ₹12,00,000. The 87A rebate of ₹60,000 covers the full slab tax. Income above this threshold triggers full slab tax without any rebate.

Important Notes

This calculator estimates tax under the new regime only. It does not compute old regime tax with deductions like 80C, 80D, or HRA. Compute old regime taxes separately to compare regimes.

The standard deduction for salaried individuals was increased to ₹75,000 by Budget 2024 (effective FY 2024-25). This applies to both FY 2024-25 and FY 2025-26.

Capital gains rates were revised by Budget 2024: STCG u/s 111A increased from 15% to 20%, LTCG u/s 112A from 10% to 12.5%, and the LTCG exemption from ₹1L to ₹1.25L. These rates apply from July 23, 2024.

This is an indicative estimate for planning purposes. Consult a chartered accountant or use the official Income Tax Department website (incometax.gov.in) for filing. This tool does not constitute tax advice.

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Income Tax Calculator — India New Regime