Income tax depends on your taxable income, applicable tax regime, deductions, exemptions and other factors. Understanding these can help you estimate your tax liability and make informed financial decisions.

This page explains how income tax is calculated for individual taxpayers, the applicable income tax slabs, the difference between the old and new tax regimes, and commonly available tax deductions and rebates.

Note: This is an educational guide to income tax calculation. UTI Mutual Fund does not currently provide an online income tax calculator on this page.

Income Tax Calculation for 2026-27

For income earned from 1 April 2026 to 31 March 2027, taxpayers should refer to the provisions applicable for Tax Year 2026-27.

The broad process of calculating income tax is:

The actual calculation may vary depending on the taxpayer's income sources, tax regime, age, residential status, deductions, capital gains and other applicable provisions.

Income Tax Slabs for FY 2026-27

For taxpayers looking for the latest income tax slabs for FY 2026-27 / AY 2027-28, the new tax regime is the default regime for eligible taxpayers. Taxpayers who meet the applicable conditions can opt for the old tax regime.

New Tax Regime

These are the slab rates applicable under the new tax regime for the relevant year.

Old Tax Regime

For individuals below 60 years of age, the old tax regime has the following slab structure:

Under the old tax regime, the basic exemption limit is higher for senior citizens and super senior citizens, subject to the applicable age criteria.

Old Tax Regime vs New Tax Regime

The new tax regime has lower tax rates and a higher basic exemption threshold, but fewer deductions and exemptions are available.

The old tax regime has higher slab rates but allows eligible taxpayers to claim a wider range of deductions and exemptions.

New Tax Regime

The new tax regime is the default regime for eligible taxpayers.

Under this regime:

• The basic nil-rate slab is up to ₹4 lakh.
• Tax rates range from 5% to 30%.
• The highest slab rate of 30% applies to income above ₹24 lakh.
• Most deductions and exemptions available under the old regime cannot be claimed.
• A standard deduction is available to eligible salaried taxpayers and pensioners.
• Eligible resident individual taxpayers can claim a rebate under Section 87A, subject to the prescribed conditions.

Old Tax Regime

Under the old tax regime:

• The basic exemption limit for individuals below 60 years is ₹2.5 lakh.
• Eligible senior citizens receive higher basic exemption limits.
• Tax rates range from 5% to 30%.
• Several deductions and exemptions can be claimed, subject to the applicable conditions and limits.
• These include deductions under sections such as 80C and 80D and certain NPS-related deductions.

The choice between the two regimes depends on your income, deductions, exemptions and individual circumstances.

How to Calculate Income Tax?

Suppose an individual has taxable income of ₹15 lakh under the new tax regime, before considering the applicable rebate, deductions or special-rate income.

The tax is calculated progressively across the slabs:

• ₹0 – ₹4 lakh: Nil
• ₹4 lakh – ₹8 lakh: 5% = ₹20,000
• ₹8 lakh – ₹12 lakh: 10% = ₹40,000
• ₹12 lakh – ₹15 lakh: 15% = ₹45,000

Income tax before rebate and cess = ₹1,05,000

The final tax liability may differ after considering the applicable rebate, surcharge, Health & Education Cess and any other applicable provisions.

This illustrates an important point: the highest slab rate does not apply to your entire income. Different portions of taxable income are taxed at the applicable slab rates.

Section 87A Tax Rebate

Section 87A provides a tax rebate to eligible resident individual taxpayers.

For the new tax regime, the maximum rebate has been increased to ₹60,000 where taxable income does not exceed ₹12 lakh, subject to the applicable conditions.

Under the old tax regime, eligible resident individuals with taxable income up to ₹5 lakh can claim a rebate of up to ₹12,500.

The Section 87A rebate is a reduction from the income tax payable and should not be confused with a deduction from taxable income.

Standard Deduction

A standard deduction is available to eligible salaried taxpayers and pensioners, subject to the applicable tax regime and conditions.

For the new tax regime, the standard deduction available to salaried individuals and pensioners is ₹75,000.

Under the old tax regime, the standard deduction is ₹50,000.

The standard deduction reduces taxable income before the applicable tax rates are applied.

Tax-Saving Deductions Under the Old Tax Regime

One of the key differences between the old and new tax regimes is the availability of deductions.

Under the old tax regime, eligible taxpayers can claim deductions subject to the applicable conditions and limits.

Section 80C

Section 80C allows eligible taxpayers to claim deductions for specified investments and payments, subject to an overall limit of ₹1.5 lakh.

Some commonly known Section 80C avenues include:

• Equity Linked Savings Schemes (ELSS)
• Public Provident Fund (PPF)
• Eligible life insurance premiums
• Employees' Provident Fund (EPF), subject to applicable conditions
• Certain tuition fees
• Certain housing loan principal repayments
• Other specified investments and payments

Section 80C deductions are generally not available under the new tax regime.

Section 80D

Eligible taxpayers can claim deductions for specified health insurance premiums and certain medical expenses under Section 80D, subject to the applicable conditions and limits.

Section 80CCD

Certain contributions to the National Pension System (NPS) may qualify for deductions under the applicable provisions of Section 80CCD.

The availability and amount of deduction depend on the taxpayer's circumstances and the applicable tax regime.

Is ELSS Eligible for Tax Saving?

Equity Linked Savings Scheme (ELSS) is a type of mutual fund scheme that qualifies for a deduction under Section 80C, subject to the applicable conditions and limits.

An eligible taxpayer opting for the old tax regime can claim a deduction for eligible ELSS investments within the overall Section 80C limit of ₹1.5 lakh.

However, the tax deduction under Section 80C is generally not available if the taxpayer opts for the new tax regime.

ELSS investments also have a three-year lock-in period, which is the shortest among tax-saving investment options eligible under Section 80C.

Tax benefits should not be the only consideration when evaluating an investment. Mutual fund investments are subject to market risks, and investors should consider their financial goals, risk profile and investment horizon.

How Can You Reduce Your Income Tax Liability?

Your tax liability can depend on the tax regime you choose and the deductions and exemptions available to you.

Depending on your circumstances, you may consider:

• Comparing your tax liability under the old and new tax regimes.
• Claiming eligible deductions under the old tax regime.
• Using the available standard deduction.
• Claiming eligible health insurance deductions.
• Considering eligible NPS contributions.
• Investing in eligible tax-saving options such as ELSS if you opt for the old tax regime and the investment is suitable for your financial goals.
• Keeping track of TDS, advance tax and other taxes already paid.

Tax-saving investments should be considered as part of your overall financial plan rather than solely for reducing tax.

Income Tax: Important Terms

• Financial Year (FY) – Financial Year refers to the 12-month period from 1 April to 31 March during which income is earned. For example, FY 2026-27 runs from 1 April 2026 to 31 March 2027.
• Assessment Year (AY) – Assessment Year refers to the year immediately following the Financial Year, in which income earned during the Financial Year is assessed for tax purposes. For example, the Assessment Year corresponding to FY 2026-27 is AY 2027-28.
• Taxable Income – Taxable income is the income on which tax is calculated after considering eligible exemptions, deductions and other applicable provisions.
• Gross Total Income – Gross Total Income broadly refers to the aggregate income calculated under the applicable heads of income before eligible deductions under Chapter VI-A.
• Standard Deduction – A standard deduction is a deduction available to eligible salaried individuals and pensioners, subject to the applicable provisions.
• Tax Rebate – A tax rebate directly reduces the income tax payable by an eligible taxpayer. Section 87A provides a rebate to eligible resident individual taxpayers subject to prescribed income limits and conditions.
• Surcharge – Surcharge is an additional amount levied on income tax when taxable income exceeds specified thresholds. The applicable surcharge and marginal relief depend on the taxpayer's income and tax regime.
• Health & Education Cess – Health & Education Cess is charged at 4% of income tax plus applicable surcharge, subject to the applicable provisions.

Frequently asked questions

Have questions? We are happy to help.

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What is an income tax calculator?

An income tax calculator is a tool that estimates an individual's income tax liability based on factors such as income, tax regime, deductions, exemptions and applicable tax rates. If you do not have access to a calculator, you can estimate your tax liability by determining your taxable income, applying the applicable slab rates and then considering eligible rebates, surcharge and cess.

What is the income tax slab for FY 2026-27?

Under the new tax regime, income up to ₹4 lakh is taxed at 0%, while the applicable rates increase progressively from 5% to 30%, with income above ₹24 lakh falling in the 30% slab. Under the old regime, the slabs for individuals below 60 years are Nil up to ₹2.5 lakh, 5% from ₹2.5 lakh to ₹5 lakh, 20% from ₹5 lakh to ₹10 lakh and 30% above ₹10 lakh.

Is the new tax regime mandatory?

No. The new tax regime is the default regime for eligible taxpayers, but eligible taxpayers can opt for the old tax regime subject to the applicable rules and conditions.

Which tax regime is better: old or new?

There is no single regime that is better for everyone. The new regime may be suitable for taxpayers who have relatively fewer deductions and exemptions, while the old regime may be beneficial for taxpayers who can claim substantial eligible deductions and exemptions. The appropriate choice depends on your income, deductions, exemptions and financial circumstances.

How much income is tax-free in India?

The answer depends on the tax regime and the taxpayer's circumstances. Under the new tax regime, the nil-rate slab extends up to ₹4 lakh. In addition, eligible resident individual taxpayers can claim a Section 87A rebate of up to ₹60,000 where taxable income does not exceed ₹12 lakh, subject to the applicable conditions. For salaried taxpayers under the new regime, the standard deduction can further reduce taxable income.

Is Section 80C available under the new tax regime?

Generally, no. Most deductions available under Chapter VI-A, including Section 80C, are not available under the new tax regime, subject to specified exceptions. Eligible taxpayers opting for the old tax regime can claim Section 80C deductions subject to the applicable conditions and the overall limit.

Can ELSS help save tax?

ELSS investments can qualify for a deduction under Section 80C, subject to the applicable conditions and limits. However, this tax deduction is generally available only under the old tax regime. Investors should also consider the investment's risk, returns, lock-in period and suitability before investing.

Does TDS mean I have paid all my income tax?

Not necessarily. TDS is tax deducted at source during the year by an employer, bank or other deductor. Your final tax liability is determined when your total income and applicable tax provisions are considered. TDS already deducted can generally be adjusted against your final tax liability, subject to the tax credit available to you.

What documents are useful when calculating income tax?

Depending on your circumstances, you may need: Form 16, Form 16A, Annual Information Statement (AIS), Taxpayer Information Summary (TIS), Form 26AS, details of salary and other income, bank interest statements, capital gains statements, details of eligible deductions and investments, and details of TDS, TCS and advance tax paid.

Who can use an income tax calculator?

Income tax calculation tools are generally designed for individual taxpayers. However, tax rules and rates differ for companies, firms, LLPs, trusts and other entities. The tax treatment can also differ depending on the nature of income, residential status and other circumstances.

Does income tax apply to mutual fund investments?

The tax treatment of mutual fund investments depends on factors such as the type of mutual fund, nature of income or gain, holding period and applicable tax provisions. Capital gains from mutual funds may be taxed at rates different from the normal income tax slab rates. Investors should refer to the applicable tax provisions for the relevant financial year and their specific circumstances.

Income Tax Calculation: Key Takeaways

• The new tax regime is the default regime for eligible taxpayers.
• Under the new regime, income up to ₹4 lakh falls in the nil-rate slab.
• The highest slab rate of 30% applies to income above ₹24 lakh.
• Eligible resident individuals can claim a Section 87A rebate of up to ₹60,000 under the new regime if taxable income does not exceed ₹12 lakh, subject to applicable conditions.
• The old tax regime continues to be available to eligible taxpayers.
• The old regime allows eligible taxpayers to claim several deductions and exemptions that are generally unavailable under the new regime.
• ELSS investments can qualify for a Section 80C deduction under the old tax regime, subject to applicable conditions and limits.
• Health & Education Cess is charged at 4% on income tax plus applicable surcharge.

Disclaimer: The information provided on this page is based on UTI Mutual Fund's understanding of applicable income-tax laws and is intended solely for general informational and educational purposes. It is not exhaustive and should not be considered tax, legal, investment or financial advice.

Tax laws, rates, rules, exemptions and deductions may change from time to time. The tax treatment applicable to an individual may vary depending on factors including income sources, residential status, age, tax regime, nature of investments, capital gains and other circumstances.

Investors are advised to consult their tax or legal adviser for advice specific to their individual circumstances before making any investment or tax-related decision.

UTI Mutual Fund, UTI Asset Management Company Limited, UTI Trustee Company Private Limited and their affiliates shall not be responsible or liable for any loss or damage arising from reliance on the information provided herein.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.