Income Tax Calculator India

India operates a progressive tax system with different slabs for various income levels, offering taxpayers choice between old and new tax regimes. Under the old regime for FY 2023-24, income up to ₹2.5 lakh is tax-free, ₹2.5-5 lakh is taxed at 5%, ₹5-10 lakh at 20%, and above ₹10 lakh at 30%. The new regime offers lower rates but eliminates most deductions: ₹3 lakh tax-free, ₹3-6 lakh at 5%, ₹6-9 lakh at 10%, ₹9-12 lakh at 15%, ₹12-15 lakh at 20%, and above ₹15 lakh at 30%. Additional surcharge applies for higher incomes: 10% for ₹50 lakh-1 crore, 15% for ₹1-2 crore, 25% for ₹2-5 crore, and 37% above ₹5 crore. Health and Education Cess of 4% applies to total tax and surcharge. Senior citizens (60-80 years) get higher exemption limits of ₹3 lakh, while super senior citizens (above 80) enjoy ₹5 lakh exemption under the old regime.

The choice between old and new tax regimes depends on your deduction utilization and income level, with each offering distinct advantages. The old regime allows extensive deductions including Section 80C (₹1.5 lakh), 80D (health insurance), HRA, LTA, and interest on home loans, but has higher tax rates. The new regime offers lower tax rates and higher basic exemption (₹3 lakh vs ₹2.5 lakh) but eliminates most deductions except standard deduction, employer NPS contribution, and interest on affordable housing. Generally, taxpayers with significant deductions (home loan interest, insurance premiums, investments) benefit from the old regime, while those with minimal deductions find the new regime advantageous. For example, someone earning ₹10 lakh with ₹2 lakh in eligible deductions pays approximately ₹78,000 under old regime vs ₹90,000 under new regime. However, those earning ₹6 lakh with minimal deductions pay ₹30,000 under old regime vs ₹15,000 under new regime. The choice isn't permanent for salaried employees—you can switch annually during ITR filing, though business income taxpayers must commit for the entire tax regime period.

Section 80C provides the largest tax saving opportunity with ₹1.5 lakh annual deduction limit covering various investments and expenses. Eligible investments include EPF contributions, PPF, ELSS mutual funds, life insurance premiums, NSC, tax-saving FDs, ULIP, and principal repayment of home loans. Section 80D allows additional deductions for health insurance premiums: ₹25,000 for self and family, ₹25,000 for parents (₹50,000 if parents are senior citizens), plus ₹5,000 for preventive health check-ups. Section 80CCD(1B) provides extra ₹50,000 deduction for NPS investments beyond 80C limit. Home loan interest qualifies for ₹2 lakh deduction under Section 24, while first-time home buyers get additional ₹1.5 lakh under Section 80EEA for loans up to ₹45 lakh. HRA exemption depends on salary structure and city classification (50% for metros, 40% for non-metros). Education loan interest enjoys unlimited deduction under Section 80E for 8 years. Section 80G covers charitable donations with 50% or 100% deduction depending on the institution. These deductions significantly reduce taxable income, making tax planning crucial for optimization.

TDS (Tax Deducted at Source) is collected by payers when making specific payments, with rates varying by payment type and recipient status. Salary TDS is calculated monthly based on projected annual income, deductions, and exemptions. Employers deduct tax after considering employee's investment declarations and proof submissions. For other income sources, TDS rates include 10% on interest (if exceeding ₹40,000 annually for individuals, ₹50,000 for senior citizens), 10% on dividend income above ₹5,000, and varying rates for professional services, rent, and commissions. Advance tax is mandatory when tax liability exceeds ₹10,000 annually, payable in quarterly installments: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. Self-employed individuals, business owners, and those with significant non-salary income must pay advance tax to avoid interest penalties of 1% per month. The advance tax amount is calculated based on estimated annual income minus TDS already deducted. Failure to pay adequate advance tax results in interest charges under Sections 234B and 234C. Regular employees typically don't need advance tax if salary TDS covers their total liability, but those with rental income, capital gains, or consulting income often require advance tax payments.

Income tax penalties in India can be substantial, making timely compliance crucial for avoiding unnecessary costs and legal complications. Late ITR filing attracts penalties under Section 234F: ₹5,000 for income up to ₹5 lakh and ₹10,000 for higher incomes, provided filing occurs within one year of the due date. After one year, ITR filing isn't allowed except in exceptional circumstances with department permission. Interest charges apply under Section 234A at 1% per month on outstanding tax amounts from the due date until payment. Concealment of income or furnishing inaccurate particulars results in penalties of 50-200% of tax evaded under Sections 270A and 270AA. Non-filing of ITR despite taxable income can trigger prosecution under Section 276CC with imprisonment up to 7 years and fines. TDS defaults by employers result in interest at 1.5% per month plus penalties equal to the TDS amount. Advance tax defaults incur interest under Sections 234B (1% per month for shortfall) and 234C (1% per month for installment delays). The Income Tax Department also levies penalties for non-maintenance of books, failure to get accounts audited when required, and non-compliance with notices. Recent digitalization initiatives have improved detection of non-compliance, making voluntary compliance more important than ever for avoiding penalties and maintaining good standing with tax authorities.

Home loan tax benefits provide significant savings through multiple sections, but rules vary based on property type, occupancy status, and loan purpose. Interest on home loans for self-occupied property qualifies for ₹2 lakh annual deduction under Section 24, while principal repayment gets ₹1.5 lakh deduction under Section 80C (subject to overall 80C limit). First-time home buyers enjoy additional ₹1.5 lakh interest deduction under Section 80EEA for loans up to ₹45 lakh sanctioned between April 2019-March 2022. Let-out property interest deduction is unlimited under Section 24, but comes with deemed 30% standard deduction on rental income. Pre-construction interest accumulates and becomes deductible over 5 years starting from the year of completion. Joint home loans allow each co-borrower to claim proportionate deductions based on ownership and payment shares. Property tax payments are deductible from house property income. Home loan processing fees and registration charges aren't directly deductible but form part of property cost for capital gains calculation. Stamp duty and registration fees increase property cost basis, reducing future capital gains liability. For under-construction properties, interest deduction begins only after completion. Documentation requirements include loan certificates from banks, property registration papers, and payment receipts. Switching between self-occupied and let-out status affects deduction eligibility, requiring careful planning for optimal tax benefits.

Tax-saving investments under Section 80C offer dual benefits of wealth creation and tax reduction, but require strategic planning for optimal outcomes. ELSS (Equity Linked Savings Scheme) mutual funds provide potentially highest returns with only 3-year lock-in, historically delivering 12-15% annualized returns while offering tax deduction. PPF offers guaranteed returns (currently 7.1%) with 15-year lock-in and complete tax exemption (EEE status). EPF provides stable returns (8.1% for 2022-23) with employer matching and tax benefits. NSC offers fixed returns with 5-year tenure and continued tax benefits on accrued interest. Life insurance premiums qualify but focus should be on adequate coverage rather than tax saving. ULIP combines insurance and investment but often has high charges. Tax-saving FDs provide guaranteed returns but lower rates and TDS implications. NPS under Section 80CCD(1B) allows additional ₹50,000 deduction beyond 80C limit with market-linked returns but withdrawal restrictions. Effective tax planning involves balancing liquidity needs, risk appetite, and return expectations. Start investing early in the financial year to benefit from rupee cost averaging in market-linked instruments. Diversify across different 80C options rather than putting everything in one instrument. Consider your overall portfolio allocation—if equity exposure is adequate, choose debt-oriented options like PPF or NSC for stability.

Capital gains taxation in India varies significantly based on asset type and holding period, requiring careful consideration for investment and exit strategies. Equity shares and equity mutual funds held over 12 months qualify as long-term, with gains above ₹1 lakh taxed at 10% without indexation. Short-term equity gains are taxed at 15%. Debt mutual funds and other investments become long-term after 36 months, with long-term gains taxed at 20% with indexation benefit (cost adjusted for inflation). Short-term gains from debt funds are added to income and taxed at slab rates. Real estate follows 24-month rule for long-term classification, with gains taxed at 20% with indexation. However, properties acquired before April 2001 can use fair market value as cost basis. Gold and precious metals follow 36-month rule with 20% tax on indexed long-term gains. Listed bonds and debentures follow equity taxation if traded on exchanges. Cryptocurrency gains are taxed at 30% flat rate regardless of holding period, with no deduction for losses. Capital losses can offset capital gains within categories—short-term losses can offset any capital gains, while long-term losses can only offset long-term gains. Unutilized losses can be carried forward for 8 years. Section 54 provides exemption for residential property gains if reinvested in another house, while Section 54F allows exemption if entire sale proceeds are reinvested.