How to Calculate Salary Tax in India (2025 Guide)
By A1UtilityHub – autilityhub@gmail.com
Introduction
Taxes — we may not love them, but we can’t avoid them. In India, understanding your salary tax is crucial if you want to plan your finances smartly, avoid penalties, and even save money through exemptions and deductions.
In this guide, we’ll break down the 2025 salary tax structure, explain how to calculate it step-by-step, and show how the A1UtilityHub Salary Tax Calculator can do the math for you in seconds.
Step 1: Understanding Income Tax Slabs (2025)
For FY 2024-25 (AY 2025-26), India follows the new tax regime by default — but you can still opt for the old regime.
New Tax Regime Slabs
| Annual Income (₹) | Tax Rate |
|---|---|
| Up to ₹3,00,000 | 0% |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
(Note: Surcharge and cess apply as per rules)
Step 2: Know Your Components of Salary
Your CTC (Cost to Company) is not the same as your taxable income. Break it down:
- Basic Salary – Fully taxable
- HRA (House Rent Allowance) – Partially exempt if you pay rent
- Special Allowances – Fully taxable
- Perquisites – Taxable as per valuation
- Bonus/Incentives – Fully taxable
Step 3: Apply Deductions (Old Regime)
If you choose the old regime, you can claim:
- Section 80C – Investments like PPF, ELSS, LIC (up to ₹1.5 lakh)
- Section 80D – Health insurance premiums
- Section 24(b) – Home loan interest (up to ₹2 lakh)
Step 4: Calculate Tax Manually (Example)
Let’s say your annual salary is ₹10,00,000 under the new regime:
- First ₹3,00,000 = 0% → ₹0 tax
- Next ₹3,00,000 = 5% → ₹15,000
- Next ₹3,00,000 = 10% → ₹30,000
- Remaining ₹1,00,000 = 15% → ₹15,000
- Total Tax = ₹60,000 + 4% cess = ₹62,400
Step 5: Use the A1UtilityHub Salary Tax Calculator
Manual math is fine — but why waste time when you can:
- Enter annual salary
- Select new or old regime
- Get instant breakdown with cess
- See potential savings
Mini FAQ
- Q1: Is the new tax regime mandatory in 2025?
Yes, but you can opt out and choose the old regime at the start of the year. - Q2: Can I avoid paying tax if my income is ₹7,00,000?
Yes, due to rebate under Section 87A (if conditions apply). - Q3: Will A1UtilityHub’s calculator include HRA exemptions?
Yes — just enter your rent details.