How this tax calculator works
This calculator gives you CA-grade tax computation for FY 2025-26 and Tax Year 2026-27. It keeps the five income heads separate, applies HRA, marginal relief and the surcharge caps the way the Act does, and shows both regimes side by side.
Why separate income heads matter
The Income Tax Act classifies income under 5 heads (sections 14-59): (1) Salary — gets std deduction, HRA exemption. (2) House Property — gets 30% std deduction on rent, home loan interest. (3) Business/Profession — has presumptive options (44AD/44ADA/44AE) with different deemed-profit percentages. (4) Capital Gains — special rates (STCG 20%, LTCG 12.5%) NOT eligible for rebate 87A. (5) Other Sources — interest, dividend, gifts at slab rates.
Mixing them into one field gives wrong tax. For example, ₹10L salary + ₹5L LTCG equity = NOT ₹15L taxable at slab rate; it's ₹10L salary at slab + ₹5L LTCG at special 12.5% rate (with ₹1.25L exemption).
IT Act 2025 transition explained
The new Income Tax Act 2025 came into force on 1 April 2026, replacing the IT Act 1961 (which stood for 65 years with 1000+ amendments). Key facts:
• FY 2025-26 (AY 2026-27): Still under IT Act 1961, even if you file ITR after April 2026. Date of income determines the Act, not date of filing.
• Tax Year 2026-27 onwards: Under IT Act 2025. "Previous Year" and "Assessment Year" concepts merged into single "Tax Year".
• Tax rates UNCHANGED: Budget 2026 confirmed all slabs from Budget 2025 carry forward.
• Section renumbering: 80C is now Section 123, 80D is Section 126, TDS 194C is Section 393(6). Limits and benefits unchanged.
• New forms: Form 16 → Form 130, Form 26AS → Form 168, Form 16A → Form 131, Form 24Q/26Q → Form 138/140. Multiple TDS forms (26QB/QC/QD/QE) consolidated into single Form 141.
• ITR-3/4 deadline extended to 31 August (was 31 July) for non-audit cases — already applicable to FY 2025-26 returns (due 31 Aug 2026). ITR-1/2 still 31 July.
How marginal relief works
Under new regime, if taxable income is slightly above ₹12 lakh (e.g., ₹12.10L), marginal relief ensures the additional tax doesn't exceed the additional income. Without it, crossing ₹12L by ₹10K would jump tax from zero to ~₹61,500. With marginal relief, tax is capped at ₹10K. Relief applies up to about ₹12.70L of taxable income (₹12.75L gross salary after the ₹75K standard deduction is ₹12L taxable, so salaried pay nil tax up to ₹12.75L). This calculator automatically detects and applies marginal relief with an alert banner.
Which regime should I choose?
New regime wins for most. If your total old-regime deductions (80C + 80D + HRA + home loan + 80CCD(1B)) are less than ₹3.75-4.25 lakh, new regime saves more tax. Old regime wins for high-deduction households — typically high HRA + ₹2L home loan + full ₹1.5L 80C + ₹50K NPS + ₹50K health insurance. This calculator computes BOTH and shows you the better option automatically.
FAQs
Q: I'm salaried + have FD interest + rental income. How do I enter?
A: Fill three sections: (1) Salary section — gross salary, (2) Other Sources — FD interest under "FD/RD Interest", (3) House Property — let-out section with rent, municipal tax. Calculator aggregates correctly per IT Act head-wise rules.
Q: I'm a freelance CA earning ₹35L. What to fill?
A: Business/Profession section → §44ADA — Professional → ₹35,00,000. Calculator applies 50% presumptive = ₹17.5L deemed income. If you also have FD interest, fill Other Sources section.
Q: I have salary + run a small shop. How to declare both?
A: Fill Salary section with salary income AND Business/Profession section → §44AD with shop turnover. Both incomes get aggregated. Std deduction applies only to salary (not business).