How to use Salary Tax Calculator
- 1
Enter your annual or monthly salary.
- 2
The calculator applies India's New Tax Regime slabs automatically.
- 3
See total tax, education cess, effective rate, and net take-home salary.
Salary Tax Calculator
Estimate income tax under the Indian New Tax Regime for FY 2025-26. Includes education cess and effective tax rate.
Frequently Asked Questions
Which tax regime does this calculate?
The Indian New Tax Regime for FY 2025-26. Lower slab rates but no exemptions (HRA, LTA) or most deductions (80C, 80D). The New Regime is the default regime from FY 2023-24 onwards.
What are the New Tax Regime slabs for FY 2025-26?
Up to ₹3L: 0%, ₹3L–7L: 5%, ₹7L–10L: 10%, ₹10L–12L: 15%, ₹12L–15L: 20%, above ₹15L: 30%. A standard deduction of ₹75,000 applies. Income up to ₹12.75L is effectively tax-free under Section 87A rebate.
Does it include deductions like 80C or HRA?
No — 80C (PPF, ELSS, LIC), HRA, LTA, and Chapter VI-A deductions do not apply under the New Tax Regime. If your deductions are large (above ₹3.75L), the Old Regime may result in lower tax. Consult a CA for your specific situation.
What is education cess and how much is it?
Education cess is 4% levied on the total income tax payable. It funds primary education and health programs. It is added on top of your tax amount before arriving at the final tax liability.
What is the difference between effective tax rate and marginal tax rate?
Marginal rate = the rate applied to your last rupee of income (the highest bracket you reach). Effective rate = total tax paid ÷ total income × 100. Effective rate is always lower than marginal rate because lower income slabs are taxed at lower rates.
How accurate is this calculator?
It provides a reliable estimate for standard salaried employees under the New Tax Regime with no special income (capital gains, business income). For perquisites, stock options, rental income, or freelance income, consult a tax professional.
The Gap Between Your Offer Letter and Your Bank Account
The number on your job offer letter is your gross salary — what your employer agrees to pay. The number that actually lands in your account every month is your net salary — what remains after income tax, education cess, and standard deductions.
For most salaried professionals in India, this gap is somewhere between 5% and 30% of gross income depending on the total package. This calculator closes that gap — showing you exactly what the Indian New Tax Regime for FY 2025-26 means for your monthly and annual take-home pay.
Indian New Tax Regime — FY 2025-26 Slabs
The New Tax Regime (introduced in 2020, made the default regime from FY 2023-24) offers lower tax rates across all slabs but removes most exemptions and deductions.
| Annual Income Slab | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Standard Deduction: ₹75,000 (applicable under the New Regime from FY 2024-25) Education Cess: 4% on the calculated income tax amount Section 87A Rebate: Full tax rebate for income up to ₹7,00,000 (effectively ₹0 tax) Effectively Tax-Free: Income up to ₹12,75,000 is effectively tax-free after the standard deduction and 87A rebate
How Tax is Actually Calculated (Step by Step)
Indian income tax is progressive and marginal — meaning only the income in each bracket is taxed at that bracket's rate. A common misunderstanding is that reaching a higher bracket taxes all your income at the new rate. It does not.
Example: ₹14,00,000 gross salary
- Standard deduction: ₹14,00,000 − ₹75,000 = ₹13,25,000 taxable income
- Tax calculation:
- First ₹3,00,000: ₹0 (Nil)
- Next ₹4,00,000 (₹3L–7L): ₹4,00,000 × 5% = ₹20,000
- Next ₹3,00,000 (₹7L–10L): ₹3,00,000 × 10% = ₹30,000
- Next ₹2,00,000 (₹10L–12L): ₹2,00,000 × 15% = ₹30,000
- Next ₹1,25,000 (₹12L–13.25L): ₹1,25,000 × 20% = ₹25,000
- Total income tax: ₹1,05,000
- Education cess: ₹1,05,000 × 4% = ₹4,200
- Total tax liability: ₹1,09,200
- Effective tax rate: ₹1,09,200 ÷ ₹14,00,000 = 7.8%
- Monthly take-home: (₹14,00,000 − ₹1,09,200) ÷ 12 = ₹1,07,567/month
Marginal Rate vs. Effective Rate — The Number That Matters
Two numbers come up in tax conversations:
Marginal rate: The rate applied to your last (highest) rupee of income — the top tax bracket you've entered. Someone earning ₹16L is in the 30% marginal bracket.
Effective rate: Total tax paid ÷ gross income. Because lower income is taxed at lower rates, your effective rate is always lower than your marginal rate.
| Gross Salary | Approx. Tax | Effective Rate | Note |
|---|---|---|---|
| ₹6,00,000 | ₹0 | 0% | Within rebate limit |
| ₹8,00,000 | ₹10,400 | 1.3% | After standard deduction |
| ₹10,00,000 | ₹41,600 | 4.2% | After standard deduction |
| ₹12,00,000 | ₹83,200 | 6.9% | After standard deduction |
| ₹15,00,000 | ₹1,25,000 | 8.3% | After standard deduction |
| ₹20,00,000 | ₹2,29,400 | 11.5% | After standard deduction |
| ₹30,00,000 | ₹5,21,600 | 17.4% | After standard deduction |
Effective rates include 4% education cess after standard deduction of ₹75,000.
New Regime vs. Old Regime — Which is Better?
The New Regime benefits you when your eligible deductions are small. The Old Regime benefits you when your deductions are large.
Rough breakeven analysis:
| Annual Salary | Break-even Deduction Amount | Verdict |
|---|---|---|
| ₹7,00,000 or less | N/A | New Regime (₹0 tax anyway) |
| ₹10,00,000 | ~₹1,25,000 | Old Regime better if deductions > ₹1.25L |
| ₹15,00,000 | ~₹3,00,000 | Old Regime better if deductions > ₹3L |
| ₹20,00,000 | ~₹3,75,000 | Old Regime better if deductions > ₹3.75L |
Common deductions that only apply under the Old Regime:
- 80C: Up to ₹1,50,000 (PPF, ELSS, EPFO, LIC)
- 80D: Up to ₹25,000–₹50,000 (medical insurance)
- HRA: House rent allowance exemption
- LTA: Leave travel allowance
- Home loan interest (Section 24b): Up to ₹2,00,000
Salary Negotiation & Offer Comparison
When comparing job offers, always compute the net impact — not just the gross:
Offer A: ₹15,00,000 CTC
- Tax: ~₹1,25,000 + 4% cess = ~₹1,30,000
- Monthly take-home: ~₹97,500/month
Offer B: ₹18,00,000 CTC
- Tax: ~₹1,95,000 + 4% cess = ~₹2,02,800
- Monthly take-home: ~₹1,31,433/month
The ₹3L raise translates to ~₹33,900/month more in hand — not the full ₹25,000/month gross difference. Understanding this helps you set realistic expectations and counter-offer intelligently.
Disclaimer
Tax laws change annually with each Union Budget. This calculator reflects the Indian New Tax Regime for FY 2025-26 based on publicly available government notifications. For individuals with business income, capital gains, stock options, rental income, or significant perquisites, tax computation is more complex. Consult a Chartered Accountant (CA) or use the Income Tax Department's official e-filing portal for precise computation.
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