The Income Tax Department has introduced an easy-to-use tax calculator on its official website to assist taxpayers in assessing their potential savings under the revised New Tax Regime for the fiscal years 2024-25 and 2025-26, following the Budget 2025 proposals. This tool allows individuals to compare their tax liability under both the old and new tax regimes by entering their income and eligible deductions.
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With the government actively promoting the new tax regime as the default system, Budget 2025 has introduced significant revisions aimed at enhancing its attractiveness. One of the key announcements is the elimination of tax liability for individuals earning up to Rs 12 lakh annually from FY 2025-26. Additionally, the basic exemption limit under the new tax regime has been raised from Rs 3 lakh to Rs 4 lakh, further benefiting taxpayers opting for the new framework.
How the Calculator Works
Taxpayers can access the Income Tax Calculator on the Income Tax Department’s website and use it to determine which regime is more beneficial. Users need to select their residential status and enter their taxable income (excluding special rate income like capital gains). The tool then provides a detailed comparison of their total tax liability under the existing tax rates for FY 2024-25 and the revised rates under the Finance Bill 2025 (FY 2025-26).
The calculator highlights net tax savings under the new tax regime, offering taxpayers a clear picture of how much they can save from April 1, 2025, due to the revised income tax slabs.
The new tax regime, which was introduced in FY 2020-21, has undergone several modifications to make it more appealing. Some of the latest features include:
- Default Tax Regime: The new tax regime remains the default option, providing a simplified structure.
- Revised Basic Exemption Limit: From April 1, 2025, the basic exemption limit will increase from Rs 3 lakh to Rs 4 lakh.
- Higher Tax Rebate: Currently, a Rs 25,000 tax rebate is available under Section 87A for individuals earning up to Rs 7 lakh. From FY 2025-26, this rebate will increase to Rs 60,000, ensuring zero tax liability for incomes up to Rs 12 lakh.
- Limited Deductions: Unlike the old tax regime, the new regime offers limited deductions. However,
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