ITR filing AY 2026–27: How to calculate your taxable income under old and new tax regimes
When filing your ITR, the first step is to calculate your taxable income. Taxable income is the portion of your total income on which tax is actually levied after considering eligible exemptions and deductions.
When filing your ITR, the first step is to calculate your taxable income. Taxable income is the portion of your total income on which tax is actually levied after considering eligible exemptions and deductions.
Since taxpayers can choose between the old and new tax regimes at the time of filing ITR, it is important to understand how taxable income is calculated under both systems.
Here's how you can calculate your taxable income under both the old and new tax regimes for AY2026-27.
Tax slabs in old and new regimes
Here are the income tax slabs in the old and new tax regimes for individuals below 60 years of age.
| Old Tax Regime | Tax Rate |
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% above ₹2,50,000 |
| ₹5,00,001 – ₹10,00,000 | ₹12,500 + 20% above ₹5,00,000 |
| Above ₹10,00,000 | ₹1,12,500 + 30% above ₹10,00,000 |
| New Tax Regime (Section 115BAC) | Tax Rate |
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% above ₹4,00,000 |
| ₹8,00,001 – ₹12,00,000 | ₹20,000 + 10% above ₹8,00,000 |
| ₹12,00,001 – ₹16,00,000 | ₹60,000 + 15% above ₹12,00,000 |
| ₹16,00,001 – ₹20,00,000 | ₹1,20,000 + 20% above ₹16,00,000 |
| ₹20,00,001 – ₹24,00,000 | ₹2,00,000 + 25% above ₹20,00,000 |
| Above ₹24,00,000 | ₹3,00,000 + 30% above ₹24,00,000 |
How to calculate taxable income in the regime?
Consider your gross salary to be ₹14 lakh in a financial year. Under the old regime, you can claim various exemptions and deductions to reduce taxable income.
| Particulars | Amount ( ₹) |
| Gross Total Income | 14,00,000 |
| Less: Standard Deduction | 50,000 |
| Less: Section 80C Deduction | 1,50,000 |
| Less: Section 80D Deduction (Medical Insurance) | 25,000 |
| Less: Section 80CCD(1B) Deduction (NPS) | 50,000 |
| Total Deductions & Exemptions | 2,75,000 |
| Taxable Income | 11,25,000 |
Taxable Income = Gross Total Income - Total Deductions & Exemptions
Taxable Income = ₹14,00,000 − ₹2,75,000 = ₹11,25,000
How to calculate taxable income in new regime?
Consider the same gross salary is ₹14 lakh in a financial year. Under the new regime, you could claim only a few exemptions and deductions.
| Particulars | Amount ( ₹) |
| Gross Total Income | 14,00,000 |
| Less: Standard Deduction | 75,000 |
| Less: Employer's contribution to NPS [Section 80CCD (2)] | 1,50,000 |
| Total Deductions & Exemptions | 1,25,000 |
| Taxable Income | 12,75,000 |
Which regime leads to lower taxable income?
The answer depends on how many deductions and exemptions you claim. If you invest significantly in tax-saving instruments, pay health insurance premiums, contribute to NPS or claim HRA and home loan deductions, the old regime may substantially reduce your taxable income.
If you have limited deductions and prefer a simpler tax structure, the new regime may be more beneficial, even with higher taxable income, because it offers lower tax rates.
Disclaimer: This is only for informational and educational purposes. Please consult a qualified tax expert for the latest tax laws and regulations.
About the Author
Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram. <br><br> Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.
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