Income Tax Slabs for FY 2025-26 (New vs Old Regime)

Note:

1. Standard Deduction of Rs.75,000 is available.
2. Individuals earning up to Rs.12,00,000 are eligible for a rebate of ₹60,000, making them tax-free under the new regime.
3. The senior citizen tax deduction cap was enhanced from Rs.50,000 to Rs.1 lakh.

1. The Rs.2.40 lakh yearly cap on TDS on rent has been raised to Rs.6 lakh.

Check Your Credit Score for FREE

Income Tax Slabs under Old Regime for FY 2025–26

For Individuals Below 60 Years and HUFs:

Income Range (₹)	Tax Rate
Up to Rs.2,50,000	Nil
Rs.2,50,001 – Rs.5,00,000	5%
Rs.5,00,001 – Rs.10,00,000	20%
Above Rs.10,00,000	30%

Income Tax Slabs for Senior Citizens (60 to 80 years)

Income Range (₹)	Tax Rate
Up to Rs.3,00,000	Nil
Rs.3,00,001 – Rs.5,00,000	5%
Rs.5,00,001 – Rs.10,00,000	20%
Above Rs.10,00,000	30%

Income Tax Slabs for Super Senior Citizens (80 years & above)

Income Range (₹)	Tax Rate
Up to Rs.5,00,000	Nil
Rs.5,00,001 – Rs.10,00,000	20%
Above Rs.10,00,000	30%

Note: Still applicable in old regime, Full tax rebate for income up to Rs.5,00,000.

Check Your Credit Score for FREE

Old Tax Regime vs. New Tax Regime with Example

Let’s compare the tax liability of Rohit, whose gross income is Rs.8,00,000:

Particulars	Old Tax Regime (₹)	New Tax Regime (₹)
Gross Income	8,00,000	8,00,000
Standard Deduction	50,000	75,000
Section 80C Deduction	1,50,000	Not Applicable
Total Deductions	2,00,000	75,000
Taxable Income	6,00,000	7,25,000
Tax Calculation
Up to Rs.2.5L / Rs.3L	Nil	Nil
Rs.2.5L–Rs.5L / Rs.3L–Rs.6L	Rs.12,500 (5%)	Rs.15,000 (5%)
Rs.5L–Rs.6L / Rs.6L–Rs.7.25L	Rs.20,000 (20%)	Rs.12,500 (10%)
Total Tax Before Rebate/Cess	Rs.32,500	Rs.27,500
Section 87A Rebate	-₹32,500 (Applicable)	Not Applicable
Health & Education Cess (4%)	₹0	₹1,100
Total Tax Payable	₹0	₹28,600

Choosing Between Old and New Regime

1. Old Regime: Suitable if you have significant deductions and exemptions (e.g., 80C, 80D, HRA).

1. New Regime: Ideal for those with minimal deductions and seeking simplified filing.

Check Your Credit Score for FREE

Tax Slabs for Domestic Companies

Sections	Tax rate	Surcharge
Normal Rate (Turnover ≤ ₹400 crore)	25%	7% or 12%
Section 115BAA	22%	10%
Section 115BAB	15%	10%
Others	30%	7%/12%

Note: Companies under section 115BA face a 7% surcharge for income over Rs.1 crore and 12% above Rs.10 crore. Under sections 115BAA and 115BAB, the surcharge is fixed at 10% regardless of income.

Check Your Credit Score for FREE

Income Tax Rates for LLPs and Partnership Firms under Both Regimes

A partnership firm or an LLP is taxable at 30%

Note -

1. A Surcharge of 12% is levied on incomes above Rs.1 crore.
2. Health and Education Cess Rate - 4 %

Related Articles on Tax

1. Income Tax
2. Income Tax Act
3. Efiling Income Tax
4. Income Tax Return
5. Gratuity
6. GST
7. 7th Pay Commission
8. TDS
9. Form 16

Check Your Credit Score for FREE

Deductions and Exemptions under New Tax Regime

The new tax regime comes with changes that impact the deductions and exemptions available to taxpayers. While some deductions are still allowed, many from the old tax regime are no longer applicable. Below is a detailed comparison of the deductions allowed and deductions not allowed under the new tax system.

Deductions Allowed Under the New Tax Regime

Deduction	Description
Transport Allowance (for differently-abled individuals)	Taxpayers with disabilities can still claim this allowance.
Conveyance Allowance for Work-Related Travel	Travel expenses related to work remain deductible.
Compensation for Travel Costs on Transfer/Tour	Travel costs during official transfers or tours are deductible.
Daily Allowance for Work-Related Absence	Expenses incurred during work-related travel can be claimed.
Perquisites for Official Use	Perquisites for official purposes remain exempt.
Exemption for Voluntary Retirement, Gratuity, and Leave Encashment	Exemptions under Sections 10(10C), 10(10), and 10(10AA) remain in place.
Increased Standard Deduction	Standard deduction raised from Rs. 50,000 (FY 2023-24) to Rs. 75,000 (FY 2024-25).
Interest on Home Loan for Let-Out Property	Interest on loans for rented properties continues to be deductible under Section 24.
Gifts up to Rs. 50,000	Non-cash gifts up to Rs. 50,000 are exempt from tax.
Family Pension Deduction (Section 57(iia))	Increased from Rs. 15,000 to Rs. 25,000
Employer’s NPS Contribution (Section 80CCD(2))	Employer's NPS contribution increased from 10% to 14% (Budget 2024).
Additional Employee Costs (Section 80JJA)	Deductions for employing new workers are allowed.
Contributions to Agniveer Corpus Fund (Section 80CCH(2))	Contributions to this fund are deductible.

Deductions Not Allowed Under the New Tax Regime

Deduction	Description
Professional Tax and Entertainment Allowance	These allowances on salaries are no longer deductible.
Leave Travel Allowance (LTA)	LTA is no longer available under the new tax regime.
House Rent Allowance (HRA)	HRA deductions for rent payments are not available.
Allowances for MPs/MLAs	Deductions for allowances given to MPs and MLAs are removed.
Helper Allowance	Any allowance paid for hiring helpers is no longer deductible.
Children’s Education Allowance	This allowance is no longer tax-deductible.
Special Allowances (Section 10(14))	Special allowances (such as reimbursements) are no longer deductible.
Interest on Housing Loan for Self-Occupied or Vacant Property	Interest on loans for self-occupied or vacant properties is not deductible under Section 24.
Minor Child Income	Income earned by a minor child is no longer exempt.
Deductions under Sections 80TTA and 80TTB	Deductions for savings account interest (Section 80TTA) and senior citizens' interest (Section 80TTB) are not available.
Deductions under Sections 80C, 80D, and 80E	These deductions (except Section 80CCD(2) and 80JJAA) are no longer allowed.
Additional Depreciation (Section 32(1)(iia))	The provision for additional depreciation on business assets is removed.
Deductions under Sections 32AD, 33AB, and 33ABA	Specific investment-related deductions are not available.
Scientific Research Deductions (Sections 35(2AA), 35(1)(ii), (iia), (iii))	Deductions related to scientific research are no longer allowed.
Deductions under Sections 35AD or 35CCC	Business-related deductions under these sections are not available.
Exemption for SEZ Units (Section 10AA)	SEZ units are no longer exempt under Section 10AA.
Exemptions for Perquisites or Allowances (e.g., Rs. 50 per meal)	Perquisites like meal allowances are no longer exempt.
Employee's NPS Contribution	Employees can no longer claim deductions for their own NPS contributions.
Donations to Political Parties or Trusts	Donations to political parties or trusts are not deductible.

Know  How to Calculate your Income Tax  

Surcharge and Cess

Company-Specific Surcharge Details under Tax Regimes:

Income Range (₹)	Surcharge Rate (Old Regime)	Surcharge Rate (New Regime)
₹50 lakh – ₹1 crore	10%	10%
₹1 crore – ₹2 crore	15%	15%
₹2 crore – ₹5 crore	25%	25%
Above ₹5 crore	37%	25% (Reduced from 37%)

FAQs on Income Tax Slab

• Who makes changes to the income tax slabs in India?

  The changes to the income tax slabs in India are proposed by the Finance Ministry of India.

• Is ₹12 lakh income completely tax-free under the new regime?

  Yes, with a ₹75,000 standard deduction and ₹60,000 rebate, income up to ₹12 lakh becomes tax-free.

• What is the standard deduction for FY 2025–26?

  Salaried and pensioned taxpayers get a standard deduction of Rs.75,000 under the new tax regime.

• Can I change tax regimes every financial year?

  Yes, salaried taxpayers can switch between regimes each year by filing Form 10-IE.

• Are senior citizens eligible for the new regime?

  Yes, they can opt for the new regime, though the old regime offers higher exemption limits by age.

• When are the changes to the income tax slabs in India proposed?

  The changes to the income tax slabs in India are announced by the finance minister of the country. This proposal is usually made when the annual budget is announced every year in the month of February.

• Who should prefer new tax regime?

  If your tax deductions total less than Rs.3.75 lakh and you earn Rs.20 lakh, the new system will benefit you. Otherwise, choose the previous tax system.

• How Rs.7 lakh income is tax free?

  From FY 2023–2024, the Section 87A tax rebate cap has been raised. You will be qualified for a tax rebate of Rs.25,000 on income up to Rs.7 lakh if you pick the new tax system. Previously, this was set at Rs.12,500 for income up to Rs.5 lakh.

• What is the disadvantage of new tax regime?

  There are fewer exemptions and deductions available under the new tax system. Only a select handful are available, such as the standard deduction, leave travel reimbursement, and tax-free Provident Fund withdrawals.

• Who can claim rebate under Section 87A?

  Rebate under Section 87A can be claimed by any resident Indian whose total annual income up to Rs.7 lakh as per the new regime.

• Which tax regime is better for Rs.5 lakh salary?

  The tax deduction is 5% for both the regimes if your annual salary is Rs.5 lakh. Have a look at the investments you have made and the ways in which you would like to have tax exemptions based on which you can decide which tax regime will be suitable for you.

• Which tax regime is better for Rs.15 lakh?

  The standard deduction is 30% for both tax regimes. However, if you have investments through which you would like to enjoy tax exemptions then opt for the old tax regime otherwise the new tax regime will work.

• Which tax regime is better for Rs.12 lakh p.a.?

  Under the old tax regime, the tax deduction is 30% while for the new tax regime it is 15%. However, based on your investments and other tax saving procedures take a call to see which of the two regimes are suitable for you. If you don’t have any investments, then opt for the new tax regime, otherwise choose the old tax regime.

• Are there separate income slab rates for different categories?

  Yes, there are separate income slab rates for different income categories such as income below Rs.2.50 lakh, more than Rs.2.50 lakh, and more than Rs.5 lakh has applicable tax rate of zero, 5.00%, and 10%.

• What is the new regime of income tax?

  The new tax regime was introduced in 2020 where various concessions are included and tax rates have been altered under this new tax regime.

• Is 80C available in the new tax regime?

  No, 80C deduction is not available in the new tax regime which is available only under old tax regime.

• Is the standard deduction of Rs.75,000 applicable in the new tax regime?

  Yes, a standard deduction of Rs.75,000 is applicable in the new tax regime from the financial year 2025-2026.

• Which deductions are not allowed in the new tax regime?

  Sections 80C, 80D, 80E, leave travel concession, house rent allowance, interest on home loans (Section 24b), SEZ unit exemption, standard deduction, deduction for entertainment allowance, and various other deductions under Sections 32AD, 33AB, 33ABA, 35AD, and 35CCC are not allowed. 

• Can I switch the Income tax regime each year?

  Yes, you can switch the income tax regime as per requirement every year. The taxpayer can switch the tax regime while filling in the Income Tax Return.

• Do I have to mandatorily opt for a new tax regime while filing returns for AY 2025–26?

  No, it is not mandatory to opt for a new tax regime while filing returns for AY 2025-2026. Taxpayers have the freedom to select between new and old tax regimes at the beginning of the year, while it can be modified while filing tax returns.

• Do I have to mandatorily opt for a new tax regime while filing returns for AY 2025–26?

  No, it is not mandatory to opt for a new tax regime while filing returns for financial 2025-2026. Taxpayers have the freedom to select between new and old tax regimes at the beginning of the year, while it can be modified while filing tax returns.

• Is the due date for filing an income tax return the same for all taxpayers?

  No, the due date for filling income tax returns is not the same for all employees. The due date for individual taxpayers is 31 July of the assessment year.

• Who decides the IT slab rates and can they change?

  Yes, IT slab rates change and are decided by the government. The change in the IT slab rates for the financial year are first introduced in the budget and presented in the parliament.

• Do I need to file Income Tax Return if my annual income is below Rs.3 lakh?

  You need not file an ITR if your yearly income is below Rs.3 lakh under new regime but you should file a 'Nil Return' just for the record as there are many cases where you can produce them as proof of your employment. For instance, you can provide your ITR while applying for a loan or passport.

• How is the income of a taxpayer classified?

  Under Section 14 of the Income Tax Act, the taxpayer's income has been classified under 5 different income heads such as Salaries individuals, Capital gains, Gains/Profits from profession or business,Income from house property, Income from other sources.

• Is income up to Rs.5 lakh tax-free?

  No, income up to Rs.5 lakh is not tax-free. However, individuals who earn an income of up to Rs.3 lakh under the new regime do not have to pay tax.

• Will there be any standard deductions for the financial year 2025-2026?

  Yes, for the financial year 2025-2026, Rs.75,000 will be the standard deduction under the new regime.

• Will there be different tax slabs for various categories?

  Depending on the income and age of the individual, the tax slab he/she will fall under will vary.

News About Income Tax Slab and Rates