How Does the Income Tax Calculator Work?
Under the Union Budget 2024, the New Tax Regime is the default tax regime with revised tax slabs and an increased Standard Deduction of ₹75,000 (up from ₹50,000). Taxable income up to ₹7,00,000 incurs zero tax due to Section 87A rebate.
The Old Tax Regime allows extensive deductions including Section 80C (up to ₹1.5L), 80D health insurance, HRA, and Home Loan interest (Section 24b up to ₹2L).
Formula & Mathematical Methodology
Tax is calculated incrementally by tier with a 4% Health & Education cess applied to total computed tax:
Total Tax = (Slab Tax - Rebate 87A) + (4% Health & Education Cess)
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Step-by-Step Practical Calculation Example
For a salaried employee earning ₹12,00,000 per annum with ₹1.5L 80C deductions:
- New Regime Tax (₹75k std deduction): ₹85,800
- Old Regime Tax (₹50k std + ₹1.5L 80C): ₹1,17,000
- Recommendation: New Regime saves ₹31,200