How Income Tax is Calculated: New vs Old Regime Slabs, Rebates & Deductions
A step-by-step breakdown of progressive tax slabs, standard deductions, Section 87A rebate thresholds (₹12L for FY 2025-27 vs ₹7L for FY 2024-25), and marginal relief.
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1. Current Tax Regime Slabs (Budget 2025 / FY 2026-27 & FY 2025-26)
Taxable Income = Gross Income - Standard Deduction (₹75,000)
2. Historical FY 2024-25 Slabs (Finance No. 2 Act, 2024)
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3. Section 87A Rebate & Marginal Relief Evolution
Frequently Asked Questions
Common questions and mathematical nuances for this calculation.
What is the tax on a ₹12 Lakh salary in FY 2024-25 vs Current FY 2026-27?
In FY 2024-25, a salaried employee earning ₹12 Lakhs paid ₹71,500 tax. Under Current FY 2026-27 (and FY 2025-26), the same ₹12 Lakhs salary incurs ₹0 tax due to the expanded ₹12 Lakh Section 87A rebate threshold.
What is the Health and Education Cess rate?
A mandatory 4% cess is applied to the total net income tax across all regimes and financial years.
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