What is Taxable Income?

Taxable Income is the total income of an employee minus allowed exemptions and deductions as per the Income Tax Act. Taxable Income is calculated as sum of Gross Salary, Bonus and Other income minus the exemptions and deductions allowed in the tax regime chosen. The Old regime has more exemptions and deductions when compared to the New regime which allows only deduction and no exemption.

To calculate Taxable Income and to learn how it is calculated, follow the steps below. We are using an Income Tax Calculator to calculate Taxable Income with data from your payslip and the tax saving investments you have made.

Step 1: Open the Income Tax Calculator

Step 2: Fill in Basic Details

Basic details for Calculate Taxable Income

Step 3: Key in your Salary Details

Copy the earnings and deductions from your payslip to appropriate salary heads listed.

Salary Earnings for Calculate Taxable Income
Salary Deduction for Calculate Taxable Income

Step 4: Calculate Taxable Income

Click button ‘Compute’ to calculate Income tax which also calculates the taxable income.

Compute Taxable Income

Step 5: Taxable Income

View calculation summary for details on how the Taxable Income is calculated.

Taxable Income

Try the Free Online Income Tax Calculator

Step 6: Taxable Income in New Regime

In New Regime of Income Tax, Taxable Income is calculated as

Gross Salary + Bonus + Other income – Deductions under Chapter 6A

 Taxable Income in Regime

Step 7: Calculation of Taxable Income in New Regime

Gross Salary is the total earnings from your payslips.

Salary Taxable Income

Bonus is an annual payment received from your employer.

Bonus to Calculate Taxable Income

If you have any other income besides your salary, you should declare it.

Declare Taxable Income
Taxable Income

If your employer is contributing to your NPS account, you are eligible for deduction under Section 80CCD(2) which is under Chapter 6A.

Other Taxable Income
Calculate Taxable Income

Step 8: Taxable Income in Old Regime

In Old Regime of Income Tax, Taxable income is calculated as

Gross Earnings + Bonus – Professional Tax – Standard Deduction – Exemptions under section 10 & 17 + Other income – Deductions under Chapter 6 and 6A – Housing Loan interest.

 old regime of Taxable Income

Step 9: Calculation of Taxable Income in Old Regime

Professional Tax should appear in your payslip.

Professional Tax of Taxable Income

Standard Deduction is a deduction provided to all by the income tax authority.

 Taxable Income in old Regime

If you want to claim exemptions under Section 10 & 17 you should declare it under the declarations section.

Leave Travel Taxable Income
old regime Taxable income

Similarly, you should make declarations against Chapter VI and VIA

Calculate Taxable income Life Insurance
Old regime Taxable income

You can also declare your Housing Loan interest under Section 24(b) and Housing Loan principal under Section 80C.

Section 24(b)House Loan
House Loan To Calculate Taxable Income

Step 10: Taxable Income with Declarations

Let’s compute tax again with the declarations made


As you see, the calculator takes care of each declaration and puts them under respective heads.

Calculate Taxable Income

New to Income tax? There is nothing to worry about!
Calculate your Income Tax with data from your payslip

The income tax calculator helps you understand the tax calculation process and also helps you save tax by letting you experiment your investment declarations. The income tax calculator advises you on how to save maximum tax.