Calculate Your Income Tax Online – Free Tax Calculator FY 2024-25

income tax calculators are among the most convenient tools to simplify your salary tax calculation. However, before using these tools, it’s helpful to understand how income tax on salary is actually calculated. These calculators provide estimated tax amounts based on the income details and deductions you input.

Calculating income tax on your salary is a vital part of financial planning. Whether you follow the old tax regime or the new one, understanding how your tax liability is computed helps you make smarter decisions. In this guide, we’ll break down how to calculate income tax on salary with a practical example.

Steps to Calculate Income Tax FY 2024-25 (Old Regime)

If you’ve opted for the old tax regime, you can claim exemptions and deductions. Follow these steps:

1. Compute Gross Salary

Gross Salary = Basic Salary + House Rent Allowance (HRA) + Special/Other Allowances

Assumed Total = ₹12,00,000

2. Calculate Exemptions and Allowances

Like HRA (as per Section 10(13A)), Leave Travel Allowance (LTA), Any other eligible allowances

Assumed Total Exemptions = ₹1,50,000

3. Deduction under Section 16

Standard Deduction, Professional Tax, Entertainment Allowance

Assumed Standard Deduction = ₹50,000

4. Calculate Net Salary

Net Salary = Gross Salary – Exemptions – Section 16 Deductions

₹10,00,000 = ₹12,00,000 – ₹1,50,000 – ₹50,000

5. Claim Deductions of 80C 80D Etc.

Which Includes PF, NPS , Life Insurance, Tuition Fees of Kids Etc

Assumed Total Deductions = ₹70,000

6. Calculate Taxable Income

Taxable Income ₹9,30,000 = Net Salary ₹10,00,000 – Deductions ₹70,000

7. Apply Income Tax Slabs (FY 2024–25 – Old Regime)

• Up to ₹2.5 lakhs – Nil
• ₹2.5L – ₹5L → 5% = ₹12,500
• ₹5L – ₹10L → 20% on ₹4.3L = ₹86,000

Total Basic Tax = ₹12,500 + ₹86,000 = ₹98,500

8. Net Tax Payable

Basic Tax ₹98,500 + 4% Education Cess ₹3,940 = ₹1,02,440

Steps to Calculate Income Tax FY 2024-25 (New Regime)

Under New regime Most common deductions like 80C, 80D, 80G etc. are not allowed except Standard Deduction ₹75,000, NPS Contribution Under Section 80CCD(2).

1. Compute Gross Salary

Gross Salary = Basic Salary + House Rent Allowance (HRA) + Special/Other Allowances

Assumed Total = ₹12,00,000

2. Deduction under Section 16

Only Standard Deduction Allowed of ₹75,000

3. Calculate Net Salary

Net Salary = Gross Salary – Section 16 Standard Deductions

₹11,25,000 = ₹12,00,000  – ₹75,000

4. Claim Deductions

Under New regime Most common deductions like 80C, 80D, 80G etc are not allowed. Only NPS Under Section 80CCD(2) is allowed. Assumed Nil for this example.

5. Calculate Net Taxable Income

Taxable Income ₹11,25,000 = Net Salary ₹11,25,000 – Deductions ₹00

6. Apply Income Tax Slabs (FY 2024–25 – New Regime)

• Up to ₹3 lakhs – Nil
• ₹3L – ₹7L → 5% = ₹20,000
• ₹7L – ₹10L → 10% = ₹30,000
• ₹10L – ₹12L → 15% on ₹1,25,000 = ₹18,750

Total Basic Tax = ₹20,000 + ₹30,000 + ₹18,750 = ₹68,750

7. Net Tax Payable

Basic Tax ₹68,75 + 4% Education Cess ₹2,750 = ₹71,500

Choose the option which result in lower tax payable.