Question 1

How is income tax calculated in India?

Accepted Answer

Income tax in India is calculated based on tax slabs. Your total income minus eligible deductions gives taxable income. Tax is applied at different rates for different income slabs. After computing slab-wise tax, rebate under 87A (if eligible), surcharge, and 4% health & education cess are applied.

Question 2

What deductions are available under the old regime?

Accepted Answer

The old regime allows deductions under Section 80C (up to 1.5 lakh for investments like PPF, ELSS, EPF), Section 80D (medical insurance premiums), HRA exemption, standard deduction, home loan interest under Section 24, and various other deductions under Sections 80E, 80G, 80TTA, etc.

Question 3

What is Section 87A rebate?

Accepted Answer

Section 87A provides a tax rebate for individuals with taxable income below a threshold. Under the new regime for FY 2025-26, if taxable income is up to Rs 12 lakh (after standard deduction), you get full rebate on tax. Under the old regime, the rebate is available for taxable income up to Rs 5 lakh.

Question 4

What is the standard deduction for FY 2025-26?

Accepted Answer

For FY 2025-26 under the new tax regime, the standard deduction is Rs 75,000. Under the old regime, it is Rs 50,000. This deduction is available to all salaried individuals and pensioners without any proof of expenditure.

Question 5

What is health and education cess?

Accepted Answer

Health and education cess is levied at 4% on the total income tax (including surcharge, if any). This cess is applicable to all taxpayers regardless of the regime chosen and is used to fund health and education initiatives.

Income Slab	Rate	Tax
₹-1 - ₹4 L	0%	₹0
₹4 L - ₹8 L	5%	₹20,000
₹8 L - ₹12 L	10%	₹12,500
₹12 L - ₹16 L	15%	₹0
₹16 L - ₹20 L	20%	₹0
₹20 L - ₹24 L	25%	₹0
Above ₹24 L	30%	₹0

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