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How to Calculate the New Tax Regime

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Created on
May 5, 2023


What’s Inside

The new tax regime is applicable from 2023 and offers the chance to shift from the old system. But since you might be familiar with the deductions and benefits of the old regime, the new taxation method feels like an unexplored area. But there is a solution. Using an income tax calculator new regime tax rates and deductions can become clearer.

The calculator is a great way to ascertain which tax regime is more suitable. But how to get started with the calculations?

Purpose of an Income Tax Calculator

With all the new avenues and deductions, it can be challenging to calculate your income tax under the new regime. What an income tax calculator does is it simplifies the process for you. It estimates the taxes you owe based on inputs like your annual salary and profits from other avenues like shares or real estate sales. Best of all, it’s free to use!

A tax calculator new regime is also valuable for exploring investment opportunities. Several calculators provide you with investment options after accounting for your tax liabilities for a given financial year.

Here are some of the inputs required by an income tax calculator:

  • Total annual salary
  • Income from other sources
  • Age of the taxpayer
  • Housing rent paid
  • Amount invested in child’s education (if any)

In accordance with the new regime, you might also be asked for more inputs to calculate your tax liabilities accurately.

How is the Calculation Performed?

The new regime has provided relief from taxes to individuals earning up to INR 3 lakhs per annum. So, when you opt for the new tax regime, you are liable to pay taxes only if you earn more than INR 3 lakhs per annum.

After you have confirmed your annual salary, follow these steps to calculate your tax liabilities:

Check and Specify your Gross Total Income

Gross income refers to the total earnings during a specific time period, excluding taxes and other liabilities. It counts the sum from your salary from your job, freelance work, and the capital gains from avenues like shares, mutual funds or property sales.

Explore and Claim the Deductions

While the new tax regime has reduced the number of deductions, it still offers benefits of up to INR 50,000 for taxpayers. Some of the available deductions are as follows:

  • House rent allowance
  • Leave travel concession
  • Monthly interest paid on home loans
  • Business expenses
  • Medical insurance policies for self and immediate dependents
  • Contributions to the National Pension Scheme (NPS)
  • Contributions to charity
  • Repaying education loan

Subtracting the deductions from the gross total income will provide your net total income. This is the amount from which you can calculate your tax liabilities. You can also use the new tax regime calculator to know all the relevant deductions.

Refer to the Income Slabs to Detect Payable Tax

Use your net total income to check and confirm the relevant tax slab. The new tax regime comprises six income brackets, with the percentage of taxable income differing in each. If you have already paid taxes in the form of TDS, or self-assessment tax, deduct this amount from the net payable amount.

Final Thoughts

It can be challenging to keep track of your finances to keep some amount aside for taxes. Here’s where Fi Money’s AI-powered Analyser comes to your rescue! Know your money & grow your money as Analyser tracks your expenses across Merchants, Categories like food and entertainment, and Time (daily/monthly expenses).

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Frequently Answered Questions

1) How do I calculate my take-home salary with the new tax regime?

You can calculate your take-home salary by deducting income tax, PF contribution and professional tax from the gross income.

2) How much tax will I pay under the new tax regime?

If you earn less than INR 3 lakhs per annum, you are not required to pay taxes under the new regime. Otherwise, here are the avenues:

  • INR 3,01,000 – INR 6,00,000 – 5% tax
  • INR 6,01,000 – INR 9,00,000 – 10% tax
  • INR 9,01,000 – INR 12,00,000 – 15% tax
  • INR 12,01,000 – INR 15,00,000 – 20% tax
  • INR 15,01,000 and above – 30% tax


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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