Can I switch between the old and new tax regimes each year?

If you are salaried, then you can switch when filing your ITR every year. The JioFinance tax calculator lets you compare the two regimes before you decide, so you are not guessing.

My income comes from both a job and freelance work. How does that affect things?

Both are taxable. Your salary falls under the 'Salary' head, while freelance income comes under 'Business or Profession'. You add both together to arrive at your gross total income, then apply deductions as applicable. A tax calculator that handles multiple income heads, like the one on JioFinance, makes this straightforward.

Can I file my ITR through JioFinance?

Yes, the JioFinance application lets you file your ITR without any hassle. Click on the 'Tax Filing' tool, choose between the Assistive Filing or DIY Filing option, and the Tax Buddy will assist you throughout the process for a smooth experience.

My income is below the taxable limit. Do I still have to file ITR?

If your income is below the taxable limit, filing an ITR is generally not mandatory. However, filing may still be beneficial to claim a refund, carry forward losses, or meet certain specified conditions under the tax laws.

Home Blog What is Taxable Income

What is Taxable Income? How to Calculate It Step by Step

Learn what counts as taxable income and how to calculate it step by step.

JioFinance Team

6 mins read · 21 Jul 2026

What is Taxable Income? How to Calculate It Step by Step

Taxable income is the income on which you actually pay tax after applicable deductions, exemptions, and allowances.
Income can come from salary, house property, business/profession, capital gains, and other sources such as interest and dividends.
Under the new tax regime, income up to ₹12 lakh can be tax-free through the rebate, while the old regime allows several deductions and exemptions.
From 1 April 2026, the new Income Tax Act applies from Tax Year 2026–27; for example, Section 80C is renumbered as Section 123.
Compare your taxable income and tax liability under both regimes before choosing the one that works better for you.

Think your salary is your taxable income? Not quite.

Your taxable income is not what lands in your bank account each month. It is what is left after you have pulled out every deduction, exemption, and allowance you are legally entitled to claim. Get this number right, and your tax liability shrinks. Get it wrong, and you are either overpaying or under-reporting, neither of which is a great place to be. So here is a plain, honest breakdown of ‘how to calculate taxable income’.

What is Taxable Income?

Under Indian tax laws, income does not just mean your salary. The government looks at five different sources for taxable income calculation:

Salary: Your CTC, allowances, and any perquisites your employer provides
House Property: Rent you receive, or in some cases, a deemed rent on property you own
Business or Profession: Profits if you freelance, consult, or run a business
Capital Gains: What you earn by selling assets like shares, mutual funds, or property
Other Sources: FD interest, savings account interest, winnings, dividends

Add all of these up, and you have your Gross Total Income, which is Income before deductions and exemptions. But again, this is not the number you pay tax on.

Recent Update: Effective 1 April 2026, the Income Tax Act, 1961, has been replaced by the Income Tax Act, 2026. However, the provisions of the new law apply from Tax Year 2026–27 onwards.

Calculate Your Taxable Income: Tax Planning by JioFinance Application

This is the part most people skip, and it is where the real money-saving happens. Let's understand in steps how to calculate taxable income in India through the ‘Tax Filing’ tool on the JioFinance application:

Step 1: Open the JioFinance Application and click on the “Tax Planning” tool
Step 2: Choose your marital status and enter your age to continue
Step 3: Provide your income details such as annual gross income, income mode (salaried/non-salaried), monthly home rent, and click on ‘continue’
Step 4: The next page will ask you to share tax-saving investment details, which include contributions toward a home loan, interest paid, NPS, ELSS, PF, and tuition fees.Tip: If you upload the Annual Information Statement (AIS), the app will auto-fill the required details.
Step 5: Then, share details of life and health insurance, and continue to the final page
Step 6: Review details entered and click on “Calculate My Taxes”

You can then view your tax liability and total savings under both the old and new tax regimes. That is the number that gets matched against the tax slabs. That is what determines how much you actually owe. From here, you may also click on “File My Tax” to file your ITR through the JioFinance application.

Tip: The tax calculator is just one part of JioFinance. It is built as a full personal finance platform, you can track your investments, compare insurance plans, check your credit score, and plan your finances across the year, not just in March when panic sets in.

FY 2026-2027: Income Tax Slabs

Check out the table below to have an understanding of how the tax slab is defined by the Income Tax Department. It will clarify ‘what is taxable income’:

Taxable Income	New Tax Regime (for All)	Old Regime (<60 Years)	Old Regime (Seniors)	Old Regime (Super Seniors)
Up to ₹2.5 lakh	Nil	Nil	Nil	Nil
₹2.5 lakh – ₹3 lakh	Nil	5%	Nil	Nil
₹3 lakh – ₹4 lakh	Nil	5%	5%	Nil
₹4 lakh – ₹5 lakh	5%	5%	5%	Nil
₹5 lakh – ₹8 lakh	5%	20%	20%	20%
₹8 lakh – ₹10 lakh	10%	20%	20%	20%
₹10 lakh – ₹12 lakh	10%	30%	30%	30%
₹12 lakh – ₹16 lakh	15%	30%	30%	30%
₹16 lakh – ₹20 lakh	20%	30%	30%	30%
₹20 lakh – ₹24 lakh	25%	30%	30%	30%
Above ₹24 lakh	30%	30%	30%	30%

Old or New Tax Regime: Which is Better?

Since 2020, India has had two tax regimes running side by side. The old one lets you claim all the deductions mentioned above. The new one comes with lower slab rates but strips away most of those exemptions. Here are quick details:

Particulars	Old Tax Regime	New Tax Regime
Applicability	Optional to Choose	Default tax regime
Basic Exemption Limit	₹2.5 lakhs	₹4 lakhs
Maximum Tax	30% on income exceeding ₹10 lakh	30% on income above ₹24 lakh
Rebate Allowed	Up to ₹12,500	Up to ₹60,000
Standard Deduction	₹50,000	₹75,000
Tax-free Income	₹5 lakh	₹12 lakh
Tax rates	Comparatively higher rates	Comparatively lower rates
Deductions allowed	Several deductions and exemptions can be claimed	Only limited deductions are permitted
Best suited for	Taxpayers who regularly claim exemptions and deductions	Individuals with minimal or no deductions to claim

If you have a home loan, invest regularly in 80C instruments (now renumbered as Section 123 under the Income Tax Act 2025), and pay health insurance premiums, the old regime could result in a lower tax outgo. On the other hand, if you have fewer deductions to claim, or simply want less paperwork, the new regime might suit you better.

The honest answer? There is no one-size-fits-all option here. You need to run both numbers and compare. Which is where the JioFinance application comes in. The app allows you to calculate your tax liability under both regimes and identify the more tax-efficient option.

Note: You may also calculate taxable income through the official government portal for income tax.

To Sum It Up

Taxable income's meaning is not simply the amount you earn; it takes into account several other aspects as well. With the right deductions, most people can bring it down significantly, and that means paying less tax, completely legally. Whether you are a salaried employee, self-employed professional, or business owner, the key is knowing what you are entitled to claim and making sure you do not leave any of it on the table.

The JioFinance app makes the whole process approachable. Run your numbers, compare your options, and go into tax season with a clear head.