Calculation Methodology
Principal formulas, statutory assumptions, and known limits for TaxCalci estimates. This page is not a substitute for return preparation or professional advice.
Income Tax (New Regime vs Old Regime)
Default-regime slabs (Tax Year 2026-27): Section 202(1) of the Income-tax Act, 2025 applies the following rates: ₹0–4L (Nil), ₹4–8L (5%), ₹8–12L (10%), ₹12–16L (15%), ₹16–20L (20%), ₹20–24L (25%), and above ₹24L (30%). The salaried standard deduction is modelled under section 19(1), Table serial 2.
Section 156 rebate: A resident individual under the default regime may receive a rebate of up to ₹60,000 when total income does not exceed ₹12,00,000. Marginal relief applies immediately above that limit. Eligibility uses total income, including special-rate income, and the rebate cannot exceed tax payable at section 202(1) rates. A ₹12.75 lakh gross salary can therefore have nil tax only when the ₹75,000 salary deduction applies and no other income changes total income.
Special-rate income: Listed-equity STCG under section 196, listed-equity LTCG under section 198, and winnings covered by section 194 are calculated separately. The section 156 rebate is capped at default-slab tax, so it cannot erase the tax attributable to those special-rate components.
Surcharge and cess: Surcharge is calculated by total-income band, with marginal relief based on tax plus surcharge at the applicable threshold. Surcharge on represented section 196/198 gains is capped at 15%. Health and Education Cess is then applied at 4% to tax plus surcharge.
Model boundary: The general calculator does not model every capital-gain grandfathering rule, treaty position, business loss, agricultural-income integration, AMT, or filing-specific adjustment. Those facts require the relevant specialist calculator or return software.
Official-source snapshot dated 28 July 2026: Income-tax Act, 2025 as amended by Finance Act, 2026 and official Section 156 text.
HRA Metro City Exemption Rules
HRA exemption under Schedule III, Table serial 11 and the applicable rule is calculated as the minimum of:
- Actual HRA received from employer
- Rent paid minus 10% of qualifying salary
- 50% of qualifying salary for the prescribed four cities (Mumbai, Delhi, Kolkata and Chennai) or 40% elsewhere
Qualifying salary can include basic pay, dearness allowance that forms part of retirement benefits, and turnover-based commission. The calculator requires annual amounts and does not infer these components from CTC.
Official-source snapshot dated 28 July 2026: Income Tax Department salary guidance and HRA calculation rule.