📢 How to Calculate Your Income Tax for AY 2025–26: A Real Example with Table
Income Tax season is here, and many people get confused about how to calculate their total taxable income and final tax payable.
In this blog, let’s understand the complete step-by-step tax computation for AY 2025–26 (FY 2024–25) using a real-life example of an individual taxpayer.
We’ll cover:
✅ House Property Income
✅ Business Income under 44AD
✅ Capital Gains (STCG & LTCG)
✅ Other Income
✅ Final Tax Calculation including Section 87A rebate
All in a clear, easy-to-understand table format!
📌 Meet Our Example Taxpayer
Let’s take the example of Mr. Kalpesh
Status: Individual Resident
Business: Retail Trader (Presumptive Income under Section 44AD)
Assessment Year: AY 2025–26 (FY 2024–25)
✅ 1️⃣ Income from House Property
Mr. Kalpesh has one rented property. The calculation for taxable income from that property is:
| Particular | Amount (₹) |
|---|---|
| Annual Rent Received | 1,80,000 |
| Less: Standard Deduction (30%) | (54,000) |
| Net Taxable House Property Income | 1,26,000 |
✅ Easy Rule: House Property Income = Rent – 30% Standard Deduction
✅ 2️⃣ Business Income (Section 44AD)
Mr. Kalpesh has a retail business opting for the presumptive taxation scheme under Section 44AD.
| Particular | Amount (₹) |
|---|---|
| Gross Turnover | 12,35,236 |
| Actual Profit Declared | 4,10,235 |
| Profit Percentage | 33.21% |
✅ Note: Under 44AD, minimum 8% of turnover (or 6% for digital) must be declared. But here actual profit is higher, so full ₹4,10,235 is taxable.
✅ Rule: Under 44AD, declare higher of presumptive or actual profit.
✅ 3️⃣ Capital Gains
Mr. Kalpesh has sold equity mutual funds. Here’s how capital gains are computed:
| Type | Amount (₹) |
|---|---|
| Short Term Capital Gain (STCG) @ 15% | 23,546 |
| Long Term Capital Gain (LTCG) before exemption | 6,71,695 |
| Less: LTCG Exemption u/s 112A | (1,25,000) |
| Taxable LTCG | 5,46,695 |
✅ LTCG on equity above ₹1.25 lakh is taxed at 10% under Section 112A.
✅ STCG is taxed at 15% on full amount.
✅ 4️⃣ Income from Other Sources
This includes interest from bank accounts:
| Source | Amount (₹) |
|---|---|
| Savings Account Interest | 14,728 |
| Fixed Deposit Interest | 6,347 |
| Total Other Income | 21,075 |
✅ 5️⃣ Gross Total Income
Now let’s add up all sources:
| Head of Income | Amount (₹) |
|---|---|
| House Property Income | 1,26,000 |
| Business Income (44AD) | 4,10,235 |
| Capital Gains (STCG + LTCG) | 5,70,241 |
| Other Income | 21,075 |
| Total Gross Income | 12,52,550 |
✅ Note: Rounded off to ₹12,52,550
✅ Income Tax Computation Table for AY 2025–26 (FY 2024–25)
| Particulars | Amount (₹) |
|---|---|
| 1. Income from House Property | |
| Gross Annual Rent | 1,80,000 |
| Less: Standard Deduction @ 30% | (54,000) |
| Net House Property Income | 1,26,000 |
| 2. Business Income u/s 44AD | |
| Gross Turnover | 12,35,236 |
| Profit (Actual Shown @ 33.21%) | 4,10,235 |
| Business Income | 4,10,235 |
| 3. Capital Gains | |
| Short Term Capital Gain (STCG) | 23,546 |
| Long Term Capital Gain (LTCG) | 6,71,695 |
| Less: Exemption u/s 112A | (1,25,000) |
| Taxable LTCG | 5,46,695 |
| Total Capital Gains | 5,70,241 |
| 4. Other Income | |
| Savings Interest | 14,728 |
| FDR Interest | 6,347 |
| Total Other Income | 21,075 |
| 5. Gross Total Income | |
| House Property + Business + CG + OI | = 1,26,000 + 4,10,235 + 5,70,241 + 21,075 |
| Total Income (Rounded) | ₹12,52,550 |
✅ Tax Calculation Table
| Tax Component | Tax (₹) |
|---|---|
| STCG @ 15% on ₹23,546 | 3,532 |
| LTCG @ 10% on ₹5,46,695 | 54,670 |
| Income from other heads: ₹5,57,310 | |
| Slab Rate Tax | 12,866 |
| Less: Rebate u/s 87A | (12,866) |
| Subtotal Tax | 58,202 |
| Add: 4% Health & Education Cess | 2,328 |
| Total Tax Payable | 60,530 |
| Add: Interest u/s 234B & 234C | 3,980 |
| Grand Total Tax Liability | ₹64,510 |
📌 Important Notes:
✅ Section 87A rebate is ONLY on slab-rate income (up to ₹7 lakh).
✅ LTCG & STCG are not eligible for 87A rebate.
✅ LTCG gets ₹1.25 lakh exemption u/s 112A (new for FY 2024–25).
✅ Advance Tax interest u/s 234B/234C applies if paid late.
⭐ Key Learnings from This Example
✅ Always split income correctly into different heads.
✅ Apply correct tax rates for capital gains.
✅ Don’t forget 87A rebate for eligible slab income.
✅ Always verify AIS/26AS to match all incomes.
✅ Be careful with advance tax payments to avoid interest.
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✅ Conclusion:
This real-life style calculation shows how multiple income sources are handled, how LTCG/STCG are taxed, and how rebates work. Use this as your guide for AY 2025–26!