The Union Budget for the financial year FY 2026–27 has brought continuity rather than change when it comes to income tax slabs. Finance Minister Nirmala Sitharaman has decided to retain the existing tax structure for both the old and new tax regimes. This means taxpayers will continue to follow the same slab rates that were applicable in FY 2025–26, without any revisions in tax percentages or income brackets.
This decision comes after significant revisions were already introduced in the previous budget, particularly under the new tax regime. Since those changes were fairly recent, expectations for further modifications this year were minimal. Additionally, the government is in the process of implementing a new income tax framework, which has also contributed to maintaining stability in the current slab structure.
As highlighted in the Budget announcement, the revised Income Tax Act, 2025 will come into effect from 01 April 2026. The updated rules and simplified tax forms are expected to be released soon, giving taxpayers enough time to understand and adapt. The intention behind these changes is to make compliance easier and more user-friendly, ensuring that even individuals with basic financial knowledge can file their taxes without complications.
Budget 2026: Latest income tax slabs FY 2026-2027 under New Tax Regime
The new tax regime for FY 2026–27 continues with the same slab structure introduced earlier, offering a simplified system with lower tax rates but fewer deductions. It remains the default tax regime for individual taxpayers.
Key highlights
- Basic exemption limit: Rs. 4 lakh
- Rs. 4 lakh to Rs. 8 lakh: 5% tax
- Rs. 8 lakh to Rs. 12 lakh: 10% tax
- Rs. 12 lakh to Rs. 16 lakh: 15% tax
- Rs. 16 lakh to Rs. 20 lakh: 20% tax
- Rs. 20 lakh to Rs. 24 lakh: 25% tax
- Above Rs. 24 lakh: 30% tax
In practical terms, individuals earning close to Rs. 1 lakh per month may have little to no tax liability, depending on applicable rebates. However, higher income earners, especially those earning above Rs. 2 lakh per month, fall into the highest tax bracket of 30%.
These tax rates apply uniformly to all resident individuals, without any special benefits for senior or super senior citizens. The simplicity and ease of compliance continue to make the new tax regime a preferred choice for many taxpayers.
Union Budget 2026: Latest income tax slabs FY 2026-2027 under Old Tax Regime
The old tax regime remains unchanged for FY 2026–27 and continues to follow the traditional structure with higher tax rates but multiple deductions and exemptions. Unlike the new regime, taxpayers must actively choose this option while filing their income tax returns.
Key highlights
- Basic exemption limit: Rs. 2.5 lakh (for individuals below 60 years)
- Rs. 2.5 lakh to Rs. 5 lakh: 5% tax
- Rs. 5 lakh to Rs. 10 lakh: 20% tax
- Above Rs. 10 lakh: 30% tax
This regime is often preferred by individuals who can claim several deductions, although the tax rates apply at lower income levels compared to the new regime. Missing the ITR filing deadline of 31 July may restrict the option to choose this regime, resulting in automatic selection of the new tax regime.
For senior citizens aged between 60 and 80 years, the basic exemption limit increases to Rs. 3 lakh. For individuals above 80 years, it rises further to Rs. 5 lakh.
Common deductions and exemptions available
- Standard deduction
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Section 80C (including PF, PPF, equity mutual funds, NPS with additional Rs. 50,000 benefit)
- Section 80D for health insurance
- Section 80TTA for savings account interest
- Section 80G for donations
- Home loan interest benefits
Overall, the old regime continues to benefit taxpayers who actively invest and claim deductions, while the new regime suits those looking for a simpler, deduction-free approach.
Income tax slabs for FY 2025-26 under the new tax regime
The Government of India has updated the income tax slabs under the new tax regime in the Union Budget 2025. These changes will apply from April 1, 2025, for the financial year 2025-26 (AY 2026-27).
The main objective is to make the new tax regime more appealing, particularly for taxpayers who find it difficult to claim deductions through savings and investments.
Under the revised structure for FY 2025-26, the highest tax rate of 30% will apply only to incomes above Rs. 24 lakh. For those unaware, the income limit previously was Rs. 15 lakh. This change results in significant tax savings as more income falls into lower tax brackets (before the highest 30% rate comes into effect).
The table below shows the new tax slabs for FY 2025-26:
Income range |
Tax rate |
0 – Rs. 4,00,000 |
0% |
Rs. 4,00,001 – Rs. 8,00,000 |
5% |
Rs. 8,00,001 – Rs. 12,00,000 |
10% |
Rs. 12,00,001 – Rs. 16,00,000 |
15% |
Rs. 16,00,001 – Rs. 20,00,000 |
20% |
Rs. 20,00,001 – Rs. 24,00,000 |
25% |
Above Rs. 24,00,000 |
30% |
Please note that in the July 2024 Budget (released before the February 2025 Union Budget), the income tax slabs in the new tax regime were revised. This revision was made by raising the limits of two tax brackets:
- The Rs. 3-6 lakh slab became Rs. 3-7 lakh and
- The Rs. 6-9 lakh slab became Rs. 7-10 lakh
These adjustments reduced the tax burden slightly for middle-income earners. Additionally, some changes were also made in February 2023, which introduced benefits like:
- Standard deduction
- An increase in the basic exemption limit
- A higher tax rebate under Section 87A for incomes up to Rs. 7 lakh
What is income tax slab?
An income tax slab refers to a specific income range to which a certain tax rate applies. India’s tax system is progressive, meaning that people with higher incomes fall into higher slabs and therefore pay tax at higher rates. The system ensures fairness by taxing individuals according to their earnings. The term “tax slab” in India works much like “tax bracket” used in other countries.
Budget 2026: Here’s a recap of income tax slabs announced last year under old and new regimes
As India prepares for the Union Budget 2026, which will be presented on Sunday, February 1, attention is once again turning towards income tax rules. Ahead of the Budget, the Union Finance Minister has begun consultations with states and Union Territories to gather feedback and suggestions for the upcoming financial year. While taxpayers wait to see whether any fresh changes will be announced, it is useful to revisit the income tax slabs that were introduced in the previous Budget and are currently applicable for FY 2025–26 (AY 2026–27).
In Budget 2025, the government retained both the old and the new tax regimes, giving taxpayers the option to choose between them based on their income structure and eligibility for deductions. Below is a clear summary of how both regimes are structured.
New tax regime
The new tax regime was designed to offer lower tax rates across wider income slabs, making it simpler for taxpayers who do not claim multiple exemptions or deductions. Under this system, most popular deductions are not available, but the reduced rates aim to compensate for this.
One of the biggest highlights of the revised new regime is the higher nil-tax limit. Individuals earning up to Rs. 12 lakh annually are not required to pay any income tax under this structure.
Income tax slabs under the new tax regime:
Annual Income (Rs.) |
Tax Rate |
Rs. 0 – Rs. 4 lakh |
Nil |
Rs. 4 – Rs. 8 lakh |
5% |
Rs. 8 – Rs. 12 lakh |
10% |
Rs. 12 – Rs. 16 lakh |
15% |
Rs. 16 – Rs. 20 lakh |
20% |
Rs. 20 – Rs. 24 lakh |
25% |
Above Rs. 24 lakh |
30% |
Earlier, taxpayers earning Rs. 12 lakh had a tax liability of up to Rs.80,000 under the new regime. The increase in the zero-tax threshold from Rs. 7 lakh to Rs. 12 lakh significantly reduced the tax burden and benefited close to one crore taxpayers.
Additionally, a standard deduction of Rs. 75,000 is available under the new regime. This means salaried individuals with income up to Rs.12.75 lakh before deduction effectively pay no income tax.
Old tax regime
The old tax regime continues to follow its traditional slab structure and allows taxpayers to claim various exemptions and deductions. This includes benefits such as Section 80C investments, home loan interest, and health insurance premiums.
Income tax slabs under the old tax regime:
Annual Income (Rs.) |
Tax Rate |
Up to Rs. 2.5 lakh |
Nil |
Rs. 2.5 – Rs. 5 lakh |
5% |
Rs. 5 – Rs. 10 lakh |
20% |
Above Rs. 10 lakh |
30% |
While this regime offers flexibility through deductions, the higher tax rates may reduce its appeal for individuals who do not have significant eligible expenses or investments.
Income tax slabs Budget 2026 key updates: What taxpayers got in Budget 2026
Has Budget 2026 made any changes in the income tax slabs?
No changes have been introduced to the income tax slabs in the Union Budget 2026–27. Finance Minister Nirmala Sitharaman has kept both the new and old tax regimes unchanged. This means taxpayers will continue to follow the same slab rates that were applicable for FY 2025–26.
For FY 2026–27, individuals do not need to adjust their tax planning strategies based on slab revisions. The government has chosen to maintain stability in the tax structure, ensuring continuity and predictability for taxpayers. As a result, existing income brackets and applicable rates remain exactly the same without any modifications.
What changes for income tax payers from 01 April 2026?
From 01 April 2026, a significant development for taxpayers is the implementation of the new Income Tax Act, 2025. This law will replace the existing tax legislation that has been in place for several decades, marking a major structural shift in how direct taxes are governed in India.
In addition to introducing the new Act, the government has extended the deadline for filing income tax returns. The revised due date now goes up to 31 March, giving taxpayers more time to complete their filings and reducing last-minute pressure.
Despite these structural and procedural updates, there are no changes to the tax slabs or rates in this Budget. The new law has been designed to be revenue-neutral, meaning it does not alter the tax burden for individuals.
The updated Act focuses on simplifying tax provisions and removing unclear language that often leads to disputes. It also reorganises the framework by reducing sections, chapters, and overall complexity. With the inclusion of tables and formulas, the new system aims to make tax rules easier to understand and apply, ultimately improving compliance and reducing legal challenges.
What is the new Income Tax Act 2025?
The Income Tax Act, 2025 is a newly introduced law that replaces the older tax legislation while keeping tax rates unchanged. It has been designed to simplify the taxation system without increasing or decreasing the overall tax liability for individuals.
One of its key features is the removal of complex and outdated provisions that often caused confusion. By using clearer language and better-structured rules, the Act aims to reduce misunderstandings and minimise disputes between taxpayers and authorities.
The structure of the law has also been streamlined significantly. The number of sections and chapters has been reduced, making it more organised and easier to navigate. Additionally, the inclusion of simplified tools such as tables and formulas helps taxpayers interpret provisions more efficiently.
Overall, the Act focuses on clarity, ease of compliance, and a more user-friendly tax framework.
What benefits does new the I-T Act offer?
The new Income Tax Act, 2025 introduces several improvements aimed at making taxation simpler, clearer, and more efficient for taxpayers.
- Single term ‘Tax Year’: The Act replaces confusing terms like ‘assessment year’ and ‘previous year’ with a single concept called ‘tax year’. This refers to the 12-month period starting from 01 April each year, making it easier to understand.
- Flexible definition for new income sources: For newly started businesses or income sources, the tax year begins from the date of establishment and continues until the end of the financial year.
- Improved governance powers: The government can introduce new schemes to enhance transparency, efficiency, and accountability in tax administration.
- Simplified TDS provisions: Earlier scattered across multiple sections, Tax Deducted at Source (TDS) rules are now consolidated into a single section, making compliance more straightforward.
- Late filing relief for TDS refunds: Taxpayers can still claim TDS refunds even if they file returns after the deadline, without facing penalties.
- Digital-first approach: The Act promotes digital compliance and defines a virtual environment for tax-related processes, encouraging online interactions and reducing paperwork.
- Better dispute resolution system: A more structured and taxpayer-friendly mechanism has been introduced to handle disputes efficiently.
Overall, the Act focuses on reducing complexity, improving clarity, and making tax processes more accessible for individuals and businesses alike.
The new I-T Act has four core objectives
The Income Tax framework introduced in Budget 2026 focuses on four key goals that aim to modernise and simplify taxation in India.
- Simplification: Outdated terms and unnecessary provisions have been removed. The language is clearer, making the law easier to read and understand.
- Digital processes: The system supports online compliance and faceless assessments, reducing human interaction and lowering the chances of errors or corruption.
- Taxpayer-friendly approach: The new framework improves transparency, simplifies return filing, and aims to reduce the number of legal disputes.
- Global relevance: The law reflects modern economic trends, including digital assets and international income, ensuring India’s tax system stays aligned with global practices.
These objectives collectively aim to create a more efficient and user-friendly tax environment.
What is the list of items expected to get costlier?
The Union Budget 2026–27 has led to price increases in certain goods and activities due to revised duties and taxation.
- Alcohol products may become more expensive
- Cigarettes and tobacco items are likely to see higher prices
- Components used in nuclear power projects could cost more
- Minerals such as iron ore and coal may witness price hikes
- Penalties linked to incorrect income reporting may increase financial burden
- Trading instruments like stock options and futures could become costlier
These changes are aimed at increasing revenue and regulating consumption in certain sectors.
No TAN required for NRI property deals — here's what it means
The Budget for FY 2026–27 has simplified property transactions involving Non-Resident Indians (NRIs). Buyers who purchase property from NRIs will no longer need to obtain a Tax Deduction and Collection Account Number (TAN).
Earlier, TAN was mandatory for deducting tax at source in such transactions, even if it was a one-time deal. This created additional paperwork and compliance requirements for buyers.
With this change, individuals can now complete these transactions more easily using their PAN, reducing administrative burden and making the process smoother and quicker.
What gets cheaper for the public after the Budget? Check full list
The Union Budget 2026–27 has reduced duties on several items, making them more affordable for consumers.
- Imported goods meant for personal use may become cheaper
- Certain medicines for cancer treatment have reduced costs
- Drugs and specialised food for rare diseases are now more affordable
- Leather products, including footwear, may see price drops
- Textile garments could become less expensive
- Seafood items may be available at lower prices
- Overseas tour packages could be more economical
- Lithium-ion battery components have reduced costs
- Solar glass used in renewable energy may become cheaper
- Critical minerals required for industry may cost less
- Biogas-blended CNG is expected to be more affordable
- Aircraft manufacturing components may see reduced pricing
- Microwave ovens could become cheaper
- Foreign education expenses may reduce slightly
These measures aim to ease financial pressure on households and promote key industries.
How much penalty will be imposed for underreporting of income? Budget 2026 tightens the rules
The Union Budget 2026–27 introduces stricter penalties for underreporting income, ensuring greater accountability among taxpayers.
If the underreporting occurs due to a genuine mistake or oversight, the penalty will be 50% of the tax payable on the undisclosed income. This provides some relief for unintentional errors.
However, if the underreporting is found to be deliberate or involves misreporting, the penalty increases significantly. In such cases, taxpayers may have to pay up to 200% of the tax amount related to the misreported income.
These stricter rules are intended to discourage intentional tax evasion while still allowing leniency for honest mistakes.
Why were the ITR deadlines proposed to be extended?
The government has extended certain income tax return deadlines to reduce congestion during peak filing periods.
While individuals filing ITR-1 and ITR-2 will continue to have a deadline of 31 July, some categories have been given more time. Non-audit businesses and trusts can now file returns until 31 August, offering additional flexibility.
The deadline for revised returns has also been extended from 31 December to 31 March. This allows taxpayers more time to correct errors or update information in their filings.
These changes are aimed at reducing pressure on the tax portal, minimising last-minute rush, and giving taxpayers sufficient time to file accurate returns without stress.
Government hikes STT on F&O trades — what does it mean for retail investors?
The Union Budget 2026–27 has increased the Securities Transaction Tax (STT) on futures and options (F&O) trading. The rate for futures has been raised from 0.02% to 0.05%, while options transactions now attract a higher rate of 0.15%.
For retail investors, especially those who trade frequently, this means higher transaction costs. As a result, overall profits may reduce, and speculative trading becomes more expensive.
However, this change is not entirely negative. Many experts believe that higher transaction costs can discourage excessive short-term trading and promote more disciplined investment behaviour.
Over time, this could help stabilise the market by reducing unnecessary speculation. Long-term investors and institutional participants are unlikely to be significantly affected, as their strategies typically involve fewer trades and longer holding periods.
New Income Tax Act to roll out from April 2026 — what does it aim to do?
The new Income Tax Act, 2025 will come into effect from 01 April 2026, replacing the older tax framework that has been in use for decades.
The primary aim of this new law is to simplify tax-related language and remove complex provisions. By doing so, the government hopes to reduce confusion and minimise disputes between taxpayers and authorities.
Another key objective is to lower the number of legal cases related to tax interpretation. Clearer rules are expected to improve compliance and reduce litigation.
In addition, updated Income Tax Rules and redesigned return forms will be introduced. These changes are intended to make the filing process easier and more accessible, especially for individual taxpayers.
Budget 2026 cuts TCS on overseas tours, education, and medical remittances — check current vs. proposed rates
The Union Budget 2026–27 has reduced the Tax Collected at Source (TCS) on overseas tour packages to a flat rate of 2%. Earlier, the rates ranged between 5% and 20%, depending on conditions.
This change simplifies the structure and reduces the upfront cost for individuals planning international travel.
In addition, TCS under the Liberalised Remittance Scheme (LRS) for education and medical purposes has also been lowered from 5% to 2%. This offers relief to families sending money abroad for essential needs.
These reductions help improve cash flow and make overseas expenses more manageable for students, patients, and travellers.
Paid taxes but forgot to disclose foreign assets? Here's what you can do now
The government has introduced a one-time opportunity for taxpayers who have declared income but missed reporting foreign assets.
This scheme is aimed at individuals such as students, professionals, and NRIs who may have unintentionally failed to disclose overseas holdings.
The benefit applies to assets valued up to Rs. 5 crore. Eligible taxpayers can avoid penalties and legal action by paying a fixed fee of Rs. 1 lakh.
This initiative provides a chance to correct past omissions without facing severe consequences, encouraging voluntary compliance and transparency.
Who can file ITR by 31 August? — explained
The Budget 2026–27 has extended the filing deadline for certain categories of taxpayers.
Individuals and entities filing ITR-3 and ITR-4, particularly non-audit businesses and trusts, can now submit their returns until 31 August instead of 31 July.
This extension does not apply to all taxpayers. Those filing simpler returns such as ITR-1 and ITR-2 must still adhere to the 31 July deadline.
The change is designed to reduce pressure during peak filing season and provide additional time for taxpayers with more complex filings.
Investment limit for NRIs increased
The Budget has increased investment limits for Non-Resident Indians (NRIs), allowing greater participation in Indian markets.
The individual investment cap has been raised from 5% to 10%, while the overall limit has been increased from 10% to 24%.
This move is expected to attract more overseas capital into the country and improve access to long-term funding.
Higher limits also provide NRIs with more opportunities to invest in Indian businesses, contributing to economic growth and development.
What is the current rate of STT on futures in securities?
Securities Transaction Tax (STT) is charged on transactions involving specified securities carried out through recognised stock exchanges.
For options in securities, the current STT rate is 0.1% on the premium when an option is sold. In cases where the option is exercised, a rate of 0.125% is applied on the intrinsic value.
These rates form part of the broader taxation framework governing stock market transactions.
Understanding these charges helps investors calculate their overall trading costs and make informed financial decisions.
Foreign asset disclosure scheme for small taxpayers
The Union Budget 2026–27 introduces a limited-time foreign asset disclosure scheme for small taxpayers.
This scheme is specifically designed for individuals such as students, tech professionals, and NRIs who may have missed reporting overseas assets.
It allows them to declare such assets within a defined period without facing strict penalties.
By encouraging voluntary disclosure, the government aims to improve transparency while giving taxpayers a fair chance to correct past omissions.
No more deduction for interest expenses on dividend and mutual fund income
The Budget 2026–27 removes the provision that allowed deductions on interest expenses related to dividend and mutual fund income.
Earlier, taxpayers could claim such deductions up to 20% of their income from these sources.
With the new proposal, no deduction will be permitted for interest expenses incurred in earning dividend or mutual fund income.
This change increases the taxable portion of such earnings and may impact investors who relied on this benefit to reduce their tax liability.
What will be the benefit of TAN exemption?
The removal of TAN requirement in certain property transactions offers significant convenience to taxpayers.
Residents purchasing property from NRIs can now deduct tax at source using their PAN instead of obtaining a separate TAN.
This eliminates an additional compliance step, especially for individuals involved in one-time transactions.
Overall, the change simplifies the process, reduces paperwork, and makes property dealings with NRIs more efficient and user-friendly.
Budget 2026 boosts for an AI-first digital and fintech economy
The Union Budget 2026–27 places strong emphasis on building an AI-driven digital economy.
Increased investment in artificial intelligence, research, and digital infrastructure is expected to strengthen the fintech sector.
A dedicated Rs. 10,000 crore MSME and SME Growth Fund has also been introduced to improve access to funding for small businesses.
Additionally, support for innovation through regulatory frameworks and testing environments will encourage the development of new financial technologies.
These initiatives aim to create a more robust, scalable, and technology-focused economic ecosystem.
Budget 2026 strengthens domestic renewable manufacturing and energy security
The Budget 2026–27 highlights a strong push towards domestic manufacturing in the renewable energy sector.
Measures such as increased capital expenditure and reduced duties on key components like solar glass and battery systems are expected to boost competitiveness.
The focus on energy security and infrastructure development will support long-term growth in clean energy.
These steps are likely to encourage investment, improve supply chains, and promote the adoption of advanced technologies.
Overall, the approach supports India’s transition towards a sustainable and self-reliant energy future while maintaining steady economic growth.
Features of latest tax regime: FY 2025-26 (AY 2026-27)
The new tax regime introduces significant changes for taxpayers, offering revised exemption limits and rebates while simplifying the tax structure. These updates aim to make the tax system more attractive, particularly for middle-income earners, by increasing exemptions and reducing overall tax liability.
Feature |
Details |
Default tax regime |
The new tax regime remains the default option. Individuals without business income can opt for the old tax regime in any financial year. |
Basic exemption limit |
Increased from Rs. 3 lakh to Rs. 4 lakh effective April 1, 2025 (FY 2025-26), providing additional tax relief to all individual taxpayers. |
Tax rebate (Section 87A) |
Enhanced to cover taxable incomes up to Rs. 12 lakh (previously Rs. 7 lakh), ensuring zero tax liability up to this amount. |
Surcharge rate |
Highest surcharge rate of 25% on incomes exceeding Rs. 2 crore remains unchanged under Budget 2025. |
How to save taxes under the new regime 2026?
Although the new tax regime has removed several deductions that were available in the old system, salaried individuals can still take advantage of a few legitimate ways to reduce their tax outgo. Let’s look at five practical ways to save tax in the financial year 2025–26.
Save tax with the National Pension System (NPS)
Under Section 80CCD (2), an employer’s contribution to an employee’s NPS account is exempt from tax up to 14% of the basic salary. This makes NPS one of the most beneficial savings options available under the new regime. When the investor turns 60, up to 60% of the total NPS corpus can be withdrawn tax-free, while the remaining 40% must be used to purchase an annuity plan that provides a regular pension.
Save tax with a Higher EPF contribution
Contributions made by employers towards the Employee Provident Fund (EPF) are also tax-free under the new regime. Withdrawals from the EPF at retirement are exempt as well. Salaried individuals can increase their contributions through the Voluntary Provident Fund (VPF) by informing their employer. However, the combined contribution of the employer to NPS and EPF should not exceed Rs. 7.5 lakh annually, while an employee’s personal contribution should remain under Rs. 2.5 lakh per year to retain tax benefits.
Save tax by investing in arbitrage funds and harvesting gains
Instead of keeping savings in fixed deposits, which are fully taxable, employees can consider arbitrage funds. These funds provide returns similar to FDs but are taxed more favourably. Long-term gains from arbitrage funds are taxed at 12.5% after one year, while long-term capital gains up to Rs. 1.25 lakh from equity funds, arbitrage funds, or stocks are tax-free. By booking gains of up to Rs. 1.25 lakh each year and reinvesting them, individuals can optimise their tax liabilities effectively.
Save tax by optimising your CTC
Employees can further reduce their tax by restructuring certain components of their Cost to Company (CTC). Under the new regime, exemptions are available for reimbursements related to work expenses such as books, learning materials, mobile bills, broadband usage, company car leases, and meal vouchers. These reimbursements require valid bills for verification.
Save tax on let-out property
If you have a property that is rented out, the interest paid on the home loan can be claimed as a deduction. The deduction is available up to the amount of rental income earned during the year, helping reduce your taxable income even under the new tax regime.
Income tax slab and rates for FY 2024-25 (AY 2025-26) after Budget 2024
The new tax regime has been designated as the default option for individual taxpayers in FY 2024-25. While this regime offers simplified tax calculations with fewer deductions, taxpayers still retain the option to choose the old tax regime if it proves more advantageous for their specific financial situation.
The new tax regime slab rates in FY 2024-25 (AY 2025-26) have been revised, offering taxpayers additional tax relief compared to the rates applicable in FY 2023-24 (AY 2024-25).
Key changes and important notes
- These revised rates apply uniformly to all taxpayers, regardless of age
- The same tax slabs are applicable for:
- Individuals below 60 years
- Senior citizens (aged 60 to 80 years)
- Super senior citizens (aged 80 years and above)
- The old tax regime continues to offer certain advantages for senior citizens, such as higher exemption limits
Comparative tax slab rates
Annual income slab |
New tax regime FY (24-25 (AY 25-26) |
New tax regime FY 23-24 (AY 24-25) |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 3,00,001 to Rs. 6,00,000 |
5% on income exceeding Rs. 3,00,000 |
5% on income exceeding Rs. 3,00,000 |
Rs. 6,00,001 to Rs. 7,00,000 |
5% on income exceeding Rs. 3,00,000 |
15,000 + 10% on income exceeding Rs. 6,00,000 |
Rs. 7,00,001 to Rs. 9,00,000 |
20,000 + 10% on income exceeding Rs. 7,00,000 |
25,000 + 10% on income exceeding Rs. 7,00,000 |
Rs. 9,00,001 to Rs. 10,00,000 |
20,000 + 10% on income exceeding Rs. 7,00,000 |
45,000 + 10% on income exceeding Rs. 9,00,000 |
Rs. 10,00,001 to Rs. 12,00,000 |
50,000 + 15% on income exceeding Rs. 10,00,000 |
55,000 + 15% on income exceeding Rs. 10,00,000 |
Rs. 12,00,001 to Rs. 15,00,000 |
80,000 + 20% on income exceeding Rs. 12,00,000 |
90,000 + 20% on income exceeding Rs. 12,00,000 |
Above Rs. 15,00,000 |
1,40,000 + 30% on income exceeding Rs. 15,00,000 |
1,50,000 + 30% on income exceeding Rs. 15,00,000 |
New income tax slabs under the old tax regime for individual, HUF, AOP, and BOI
Under the old tax regime for FY 2024-25, different tax slabs apply based on the age of individual taxpayers, while Hindu Undivided Families (HUFs), Associations of Persons (AOPs), and Bodies of Individuals (BOIs) follow the same structure as individuals below 60 years. The tax rates remain unchanged, with benefits such as deductions and exemptions available under this regime.
Income tax slab rates for FY 2024-25 under the old regime
Annual taxable income |
Individuals below 60 years, HUF, AOP, BOI |
Senior citizens (60-80 years) |
Super senior citizens (Above 80 years) |
Up to Rs. 2,50,000 |
Nil |
- |
- |
Up to Rs. 3,00,000 |
- |
Nil |
- |
Up to Rs. 5,00,000 |
- |
- |
Nil |
Rs. 2,50,001 - Rs. 5,00,000 |
5% on income exceeding Rs. 2,50,000 |
5% on income exceeding Rs. 3,00,000 |
- |
Rs. 5,00,001 - Rs. 10,00,000 |
Rs. 12,500 + 20% on income exceeding Rs. 5,00,000 |
Rs. 10,000 + 20% on income exceeding Rs. 5,00,000 |
20% on income exceeding Rs. 5,00,000 |
Above Rs. 10,00,000 |
Rs. 1,12,500 + 30% on income exceeding Rs. 10,00,000 |
Rs. 1,10,000 + 30% on income exceeding Rs. 10,00,000 |
Rs. 1,00,000 + 30% on income exceeding Rs. 10,00,000 |
These tax slabs ensure progressive taxation, allowing deductions and exemptions under the old tax regime, making it a viable option for taxpayers looking to optimise their tax liability.
Old tax regime slabs and rates for individual taxpayers under 60 years (AY 2025-26, FY 2024-25)
The old tax regime follows a progressive taxation structure, allowing individual taxpayers below 60 years to benefit from a tax-free slab up to Rs. 2,50,000. Higher income brackets are taxed at increasing rates, starting from 5% for earnings between Rs. 2,50,001 and Rs. 5,00,000 and reaching 30% for income exceeding Rs. 10,00,000. Additionally, a surcharge applies to higher-income groups, starting at 10% for income above Rs. 50,00,000 and increasing to 37% for income exceeding Rs. 5,00,00,000. The table below outlines the applicable tax rates and surcharges under the old tax regime.
Income tax slabs and rates under the old tax regime (for individuals below 60 years)
Income slab (Rs.) |
Income tax rate |
Surcharge |
Up to 2,50,000 |
Nil |
Nil |
2,50,001 - 5,00,000 |
5% above Rs. 2,50,000 |
Nil |
5,00,001 - 10,00,000 |
Rs. 12,500 + 20% above Rs. 5,00,000 |
Nil |
10,00,001 - 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
50,00,001 - 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
1,00,00,001 - 2,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
2,00,00,001 - 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Above 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
37% |
Old tax regime slabs and rates for super senior citizens aged above 80 years (AY 2025-26, FY 2024-25)
For super senior citizens (aged 80 years and above), the old tax regime provides a higher tax exemption limit of Rs. 5,00,000. Income exceeding Rs. 5,00,000 is taxed at 20% up to Rs. 10,00,000 and 30% thereafter. A surcharge ranging from 10% to 37% is levied on incomes exceeding Rs. 50,00,000, with the highest rate applicable for incomes exceeding Rs. 5 crores.
Income tax slab |
Income tax rate |
Surcharge |
Up to Rs. 5,00,000 |
Nil |
Nil |
Rs. 5,00,001 - Rs. 10,00,000 |
20% above Rs. 5,00,000 |
Nil |
Rs. 10,00,001- Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
Rs. 50,00,001- Rs. 100,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
Rs. 100,00,001- Rs. 200,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
Rs. 200,00,001- Rs. 500,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Above Rs. 500,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
37% |
Individual taxpayers aged less than 60 years old: latest tax slabs for Annual Year 2025-26
The following table displays the latest tax slabs and rates for individuals below 60 years. Tax rates increase progressively based on income brackets, with a maximum rate of 30% applicable for income exceeding Rs. 15,00,000.
Income tax slab |
Income tax rate |
Surcharge |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 3,00,001 - Rs. 7,00,000 |
5% above Rs. 3,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Rs. 15,00,001- Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Nil |
Rs. 50,00,001- Rs. 1,00,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
10% |
Rs. 1,00,00,001- Rs. 2,00,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
15% |
Above Rs. 2,00,00,001 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
25% |
Old vs new income tax slabs and tax rates for individual taxpayers aged less than 60 years old
The table below compares the old and new tax regimes for individual taxpayers aged below 60 years.
Old tax regime |
New tax regime u/s 115BAC |
||
Income tax slab |
Income tax rate |
Income tax slab |
Income tax rate |
Up to Rs. 2,50,000 |
Nil |
Up to Rs. 3,00,000 |
Nil |
Rs. 2,50,001 - Rs. 5,00,000 |
5% above Rs. 2,50,000 |
Rs. 3,00,001 - Rs. 7,00,000 |
5% above Rs. 3,00,000 |
Rs. 5,00,001 - Rs. 10,00,000 |
Rs. 12,500 + 20% above Rs. 5,00,000 |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Rs. 10,00,001- Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Rs. 50,00,001- Rs. 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Above Rs. 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 + surcharge |
Rs. 15,00,001- Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Senior citizen taxpayers aged between 60 to 80 years: New tax slabs for AY 2025-26
Senior citizens (aged 60-80 years) benefit from a higher exemption limit of Rs. 3,00,000. The tax rates progressively increase based on income brackets, reaching a maximum of 30%.
Income tax slab |
Income tax rate |
Surcharge |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 3,00,001 - Rs. 7,00,000 |
5% above Rs. 3,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Above Rs. 15,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Nil |
Old vs new income tax slabs and tax rates for senior citizen taxpayers aged between 60 to 80 years
To make informed financial decisions, senior citizens (aged 60 to 80 years) must understand the differences between the old and new income tax slabs. The Indian government has introduced new tax regimes to simplify tax calculations, making it crucial to assess how these changes impact tax liability. The following table provides a comparative analysis of the old and new tax slabs and rates, helping taxpayers determine the most beneficial tax regime.
Old tax regime |
Income tax rate |
Surcharge |
New tax regime u/s 115BAC |
Income tax rate |
Surcharge |
Up to Rs. 3,00,000 |
Nil |
Nil |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 3,00,001 - Rs. 5,00,000** |
5% above Rs. 3,00,000 |
Nil |
Rs. 3,00,001 - Rs. 7,00,000** |
5% above Rs. 3,00,000 |
Nil |
Rs. 5,00,001 - Rs. 10,00,000 |
Rs. 10,000 + 20% above Rs. 5,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 10,00,001 - Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 50,00,001 - Rs. 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Rs. 1,00,00,001 - Rs. 2,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
Rs. 15,00,001 - Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Nil |
Above Rs. 2,00,00,001 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Above Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
10-25% |
Super senior citizen taxpayers aged over 80 years: New tax slabs for AY 2025-26
For individuals above 80 years of age, the income tax slabs and rates differ to provide additional financial relief. The table below presents the applicable tax rates under the new regime for AY 2025-26.
Income tax slab |
Income tax rate |
Surcharge |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 3,00,001 - Rs. 7,00,000** |
5% above Rs. 3,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Above Rs. 15,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
10-25% |
Old vs new income tax slabs and tax rates for super senior citizen individual taxpayers aged over 80 years
Super senior citizens (aged 80+) benefit from preferential tax treatment. The following comparison of the old and new tax slabs will help determine the most advantageous regime.
Old tax regime |
Income tax rate |
Surcharge |
New tax regime u/s 115BAC |
Income tax rate |
Surcharge |
Up to Rs. 5,00,000 |
Nil |
Nil |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 5,00,001 - Rs. 10,00,000 |
20% above Rs. 5,00,000 |
Nil |
Rs. 3,00,001 - Rs. 7,00,000** |
5% above Rs. 3,00,000 |
Nil |
Rs. 10,00,001 - Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 50,00,001 - Rs. 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 1,00,00,001 - Rs. 2,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Rs. 2,00,00,001 - Rs. 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Rs. 15,00,001 - Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Nil |
Above Rs. 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
37% |
Above Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
10-25% |
By comparing the old and new tax regimes, senior and super senior citizens can make informed decisions that optimise their tax savings. It is advisable to consult a tax professional before finalising tax declarations to ensure compliance with the latest regulations and maximise benefits.
Most important points for income tax slabs and rates for AY 2025-26 (FY 24-25)
The income tax slabs and rates for Assessment Year (AY) 2025-26 (Financial Year 2024-25) have undergone key modifications, impacting taxpayers across various categories. Below are the most significant points:
- Surcharge and cess:
- A 4% health and education cess is applicable on total tax payable.
- Surcharge rates for income above Rs. 50 lakh:
Annual taxable income |
Surcharge (old tax regime) |
Surcharge (new tax regime) |
Up to Rs. 50 Lakh |
Nil |
Nil |
Rs. 50 Lakh - Rs. 1 Crore |
10% |
10% |
Rs. 1 Crore - Rs. 2 Crore |
15% |
15% |
Rs. 2 Crore - Rs. 5 Crore |
25% |
25% |
Above Rs. 5 Crore |
37% |
25% |
- Gender neutrality: Income tax slabs and rates remain the same for male and female taxpayers.
- Tax rebate:
- Old Tax Regime: Income up to Rs. 5 lakh qualifies for a rebate of Rs. 12,500 under Section 87A.
- New Tax Regime: Income up to Rs. 7 lakh qualifies for a full tax rebate under Section 87A.
Income tax slabs for Hindu Undivided Family (HUF) for AY 2025-2026
The income tax slabs for Hindu Undivided Families (HUFs) for the Assessment Year 2025-26 have been revised to provide better financial planning opportunities. The tax structure follows both the old tax regime and the new tax regime under section 115BAC, allowing taxpayers to choose their preferred structure.
Old tax regime
|
New tax regime u/s 115BAC |
|||
Income tax slab |
Income tax rate |
*Surcharge |
Income tax slab |
Income tax rate |
Up to Rs. 2,50,000 |
Nil |
Nil |
Up to Rs. 3,00,000 |
Nil |
Rs. 2,50,001 - Rs. 5,00,000** |
5% above Rs. 2,50,000 |
Nil |
Rs. 3,00,001 - Rs. 7,00,000** |
5% above Rs. 3,00,000 |
Rs. 5,00,001 - Rs. 10,00,000 |
Rs. 12,500 + 20% above Rs. 5,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Rs. 10,00,001- Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Rs. 50,00,001- Rs. 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Rs. 1,00,00,001- Rs. 2,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
Rs. 15,00,001- Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Rs. 2,00,00,001- Rs. 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Rs. 50,00,001- Rs. 1.00,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Above Rs. 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
37% |
Rs. 1,00,00,001- Rs. 2,00,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
|
|
|
Above Rs. 2,00,00,001 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
New Income tax slabs for Non-Resident Individual (AY 2025-26)
Non-resident individuals are taxed differently based on their global income sources. The tax slabs remain aligned with resident individual tax slabs but with specific provisions for non-residents.
Old tax regime |
New tax regime u/s 115BAC |
||||
Income tax slab |
Income tax rate |
*Surcharge |
Income tax slab |
Income tax rate |
*Surcharge |
Up to Rs. 2,50,000 |
Nil |
Nil |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 2,50,001 - Rs. 5,00,000 |
5% above Rs. 2,50,000 |
Nil |
Rs. 3,00,001 - Rs. 7,00,000 |
5% above Rs. 3,00,000 |
Nil |
Rs. 5,00,001 - Rs. 10,00,000 |
Rs. 12,500 + 20% above Rs. 5,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 10,00,001- Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 50,00,001- Rs. 1,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Rs. 1,00,00,001- Rs. 2,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
Rs. 15,00,001- Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Nil |
Rs. 2,00,00,001- Rs. 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Rs. 50,00,001- Rs. 1,00,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
10% |
Above Rs. 5,00,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
37% |
Rs. 1,00,00,001- Rs. 2,00,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
15% |
|
|
|
Above Rs. 2,00,00,001 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
25% |
Association of Persons (AOP) / Body of Individuals (BOI) / Trust / Artificial Juridical Person (AJP) for AY 2025-26
Entities classified under Association of Persons (AOPs), Body of Individuals (BOIs), Trusts, and Artificial Juridical Persons (AJPs) are subject to specific tax regulations. The tax slabs are structured to align with the taxation framework applicable to individual taxpayers and business entities.
Old tax regime |
New tax regime u/s 115BAC |
||||
Income tax slab |
Income tax rate |
*Surcharge |
Income tax slab |
Income tax rate |
*Surcharge |
Up to Rs. 2,50,000 |
Nil |
Nil |
Up to Rs. 3,00,000 |
Nil |
Nil |
Rs. 2,50,001 - Rs. 5,00,000** |
5% above Rs. 2,50,000 |
Nil |
Rs. 3,00,001 - Rs. 7,00,000** |
5% above Rs. 3,00,000 |
Nil |
Rs. 5,00,001 - Rs. 10,00,000 |
Rs. 12,500 + 20% above Rs. 5,00,000 |
Nil |
Rs. 7,00,001 - Rs. 10,00,000 |
Rs. 20,000 + 10% above Rs. 7,00,000 |
Nil |
Rs. 10,00,001- Rs. 50,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
Nil |
Rs. 10,00,001 - Rs. 12,00,000 |
Rs. 50,000 + 15% above Rs. 10,00,000 |
Nil |
Rs. 50,00,001- Rs. 100,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
10% |
Rs. 12,00,001 - Rs. 15,00,000 |
Rs. 80,000 + 20% above Rs. 12,00,000 |
Nil |
Rs. 100,00,001- Rs. 200,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
15% |
Rs. 15,00,001- Rs. 50,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
Nil |
Rs. 200,00,001- Rs. 500,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
25% |
Rs. 50,00,001- Rs. 100,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
10% |
Above Rs. 500,00,000 |
Rs. 1,12,500 + 30% above Rs. 10,00,000 |
37% |
Rs. 100,00,001- Rs. 200,00,000 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
15% |
|
|
|
Above Rs. Rs. 200,00,001 |
Rs. 1,40,000 + 30% above Rs. 15,00,000 |
25% |
These tax slabs ensure that various entities and individuals are taxed fairly while providing flexibility in choosing their preferred taxation model.
New tax slabs for domestic company for AY 2025-26
The updated income tax rates for domestic companies have been introduced to enhance business growth and economic stability in India. These rates are essential for companies to plan their financial strategies and meet tax obligations effectively.
Condition |
Income tax rate (excluding surcharge and cess) |
Total Turnover or Gross Receipts during the previous year 2020-21 does not exceed Rs. 400 crores |
25% |
If opted for Section 115BA |
25% |
If opted for Section 115BAA |
22% |
If opted for Section 115BAB |
15% |
Any other Domestic Company |
30% |
Income tax rate for foreign company under new income tax regime
Foreign companies operating in India are subject to specific income tax rates, designed to align with international tax standards and promote a favorable investment environment. These rates impact financial planning and compliance for multinational corporations operating in India.
Nature of income |
Tax rate |
Royalty received from the Government or an Indian concern according to an agreement post-March 31, 1961, but before April 1, 1976; or fees for technical services from an agreement post-February 29, 1964, but before April 1, 1976, approved by the Central Government |
50% |
Any other income |
40% |
What are the exemptions/ deductions unavailable under the new tax regime in FY 24-25?
The new tax regime significantly reduced the number of available exemptions and deductions. Nearly 70 out of 100 exemptions were removed, and opting for the new tax slabs means taxpayers must forgo several key deductions, including:
- House Rent Allowance (HRA): Previously deductible under Section 10(13A), no longer available.
- Leave Travel Allowance (LTA): Section 10(5) benefits for travel expenses during leave are no longer applicable.
- Specific allowances: Section 10(14) exemptions, including conveyance and children's education allowance, are discontinued.
- Tax-free perquisites: Food coupons and similar allowances are now taxable.
- Chapter VI A deductions: No deductions under Sections 80C (investments), 80D (medical insurance), 80TTA (savings interest), etc.
- Home loan interest deduction: Interest deductions for self-occupied property under Sections 24(b) and 80EEA are removed.
What exemptions/deductions come under the new tax regime in FY 24-25?
Despite the removal of many deductions, certain exemptions and benefits remain available under the new tax regime:
- NPS contributions by employer: Up to 10% of salary (14% for Central Government employees) is deductible under Section 80CCD(2).
- Standard deduction on rental income: A standard 30% deduction applies to net rental income.
- Home loan interest (Let-out property): Interest paid on loans for let-out properties remains deductible from rental income.
- Transport allowance for Divyang employees: Tax exemption for disabled employees covering daily travel expenses.
- Conveyance allowance: Permissible for official duties.
- Allowances for travel and transfer: Exemptions for expenses related to job-related travel or transfer.
- Daily allowance: Provided for day-to-day expenses when away from the usual place of duty.
These retained benefits provide some relief to taxpayers under the new regime while simplifying tax calculations and compliance.
Deductions: Old tax regime vs. new tax regime (Section 115BAC) for FY 2024-25
The table below outlines the key differences in available deductions between the Old Tax Regime and the New Tax Regime (Section 115BAC) for the financial year 2024-25.
Deduction/ Exemption |
Old regime |
New regime (Section 115BAC) |
Section 80C (Investment in PPF, NSC, Life Insurance Premium, ELSS, etc.) |
Available up to Rs. 1.5 lakh |
Not available |
Section 80D (Health insurance premium) |
Available |
Not available |
Standard Deduction (for salaried individuals) |
Rs. 50,000 |
Rs. 75,000 (FY 2024-25) and Rs. 50,000 (FY 2023-24) |
House Rent Allowance (HRA) |
Available (based on actuals) |
Not available |
Leave Travel Allowance (LTA) |
Available |
Not available |
Interest on Housing Loan (Section 24) (for self-occupied property) |
Deduction up to Rs. 2 lakh |
Not available |
Section 80E (Interest on education loan) |
Available |
Not available |
Section 80G (Donations to charitable institutions) |
Available |
Not available |
Benefits and disadvantages of new tax regime
Choosing between India's new and old tax regimes involves weighing their respective advantages and disadvantages against your financial habits, income level, and investment strategy. Here's a breakdown to help guide your decision:
Benefits of the new tax regime:
- Simplified tax process: With fewer deductions and exemptions, the new regime streamlines tax filing, benefiting those overwhelmed by the complexity of the old regime.
- Reduced tax rates: For individuals earning up to Rs. 7 lakhs, the new regime often provides lower tax rates, potentially increasing your net income.
- Tax rebate advantage: Earnings up to Rs. 7 lakhs qualify for a full tax rebate, resulting in zero tax liability under the new regime.
- Enhanced liquidity: The absence of compulsory tax-saving investments increases available cash for other financial purposes.
Drawbacks of the new tax regime:
- Loss of deductions and exemptions: Opting for the new regime means missing out on several key deductions and exemptions (e.g., HRA, LTA), which could raise your taxable income.
- Reduced financial planning flexibility: The elimination of deductions limits opportunities to strategically lower your tax obligations through targeted investments and expenditures.
- Potentially higher taxes for higher earners: Individuals with incomes over Rs. 10 lakhs might find themselves subject to higher taxes under the new regime, especially when including surcharges on incomes above Rs. 5 crores.
- Disadvantages for long-term savers: The new regime may not suit those who depend on tax-saving investments for wealth accumulation, as it excludes these benefits.
How to calculate income tax for income tax slabs for FY 24-25 (AY 2025-26)
To illustrate the process of income tax calculation, let's take the example of Sameera, a salaried individual with an annual income of Rs. 9,00,000. Sameera is eligible for deductions under Section 80C amounting to Rs. 2,00,000. The calculation of her income tax involves a few key steps:
- Calculating gross taxable income
- Total annual income: Rs. 9,00,000
- Less deductions under Section 80C: Rs. 2,00,000
- Gross taxable income: Rs. 9,00,000 - Rs. 2,00,000 = Rs. 7,00,000
- Understanding the applicable tax slabs
The income tax rates for FY 2024-25 are structured as follows:- Up to Rs. 2,50,000: 0% (no tax)
- Rs. 2,50,001 to Rs. 5,00,000: 5%
- Rs. 5,00,001 to Rs. 10,00,000: 20%
- Above Rs. 10,00,000: 30%
- Calculating the income tax
- The first Rs. 2,50,000 of her income is tax-free.
- The next Rs. 2,50,000 (from Rs. 2,50,001 to Rs. 5,00,000) is taxed at 5%, resulting in a tax of Rs. 12,500.
- The remaining Rs. 2,00,000 (from Rs. 5,00,001 to Rs. 7,00,000) is taxed at 20%, amounting to Rs. 40,000.
- Total tax liability: Rs. 12,500 + Rs. 40,000 = Rs. 52,500.
- Consideration of surcharge and rebate
- Since Sameera's income does not exceed Rs. 50 lakhs, no surcharge applies.
- She is not eligible for the Section 87A rebate, as her taxable income is above Rs. 5,00,000.
Thus, Sameera’s total income tax liability amounts to Rs. 52,500.
How to calculate income tax liability under the old tax regime?
Calculating income tax liability under the old tax regime involves understanding the income tax slabs, deductions, and exemptions applicable for the financial year. The old tax regime allows taxpayers to claim various deductions, such as those under Section 80C, HRA, and standard deductions, which help reduce the taxable income. Here’s a step-by-step guide:
- Determine gross total income
- Sum all income sources, including salary, house property, capital gains, business or profession, and other sources like interest income.
- Apply deductions and exemptions
- Claim deductions under Section 80C (investments in ELSS, PPF, etc.), Section 80D (medical insurance), and others.
- Common exemptions include House Rent Allowance (HRA), Leave Travel Allowance (LTA), and the standard deduction of Rs. 50,000.
- Subtract these from the gross total income to calculate the net taxable income.
- Identify the applicable tax slabs
- The old tax regime has different slabs based on the taxpayer’s age group:
- Individuals below 60 years
- Senior citizens (60-79 years)
- Super senior citizens (80 years and above)
- The old tax regime has different slabs based on the taxpayer’s age group:
By applying the appropriate tax rates and deductions, taxpayers can determine their tax liability under the old regime effectively.Tax slab 2025 vs 2024
Tax slab for FY 2024-25 |
Tax slab for FY 2025-26 |
Tax rate |
Up to Rs. 3 lakh |
Up to Rs. 4 lakh |
Nil |
Rs. 3 lakh - Rs. 7 lakh |
Rs. 4 lakh - Rs. 8 lakh |
5% |
Rs. 7 lakh - Rs. 10 lakh |
Rs. 8 lakh - Rs. 12 lakh |
10% |
Rs. 10 lakh - Rs. 12 lakh |
Rs. 12 lakh - Rs. 16 lakh |
15% |
Rs. 12 lakh - Rs. 15 lakh |
Rs. 16 lakh - Rs. 20 lakh |
20% |
- |
Rs. 20 lakh - Rs. 24 lakh |
25% |
More than Rs. 15 lakh |
More than Rs. 24 lakh |
30% |
Income tax is a direct tax that you pay to the government. It is calculated as a percentage of your annual earnings and is used by the government to fund infrastructural development, pay public sector employees, finance public healthcare and defence departments, and so on. The Central Board of Direct Taxes (CBDT), a body responsible for managing taxes, levies taxes on individuals via a slab-based system. As per this, every taxpayer is liable to pay tax based on the income tax slab they fall under, at the rate prescribed by the government for each slab.
The income tax rates are progressive in nature, which means that they increase with an increase in your income. Further, the tax slabs in India can change over time depending on the announcements made during the Union Budget or via economic policy declarations. Therefore, it is important that you keep an eye on current developments to be aware of new income tax slabs, if any. To understand the concept of income tax slabs better, start by reading who is liable to pay income tax in India.
Heads of income for tax purposes
For individual taxpayers, income is categorised into five slabs based on its source. These five categories are as follows.
- Salary Income: Monthly salary and pension
- Profits or Gains from Profession and Business: Income earned by self-employed individuals, businessmen, freelancers, contractors, professionals and life insurance agents
- Income from House Property: Rental income
- Capital Gains: Gains from selling a residential property, mutual fund units or shares
- Income from Other Sources: Interest earned from a savings account or a fixed deposit, lottery, etc.
To arrive at your total taxable income for a financial year, you are required to declare all income that you earn under various heads and then subtract any tax deductions that you are eligible for. Post this, you can calculate the total tax payable for the year by identifying the rate applicable to you using Bajaj Finserv income tax calculator. If the total tax that you pay for a financial year exceeds your tax liability, you can file for an income tax refund online. However, to do this, you are required to e-file your income tax return. To do so with ease, remember the following important dates.
- 31st January: Last date to declare investments and submit proof of the same
- 31st March: Last date to invest in vehicles that offer a deduction under Section 80C
- 31st July: Last date for income tax filing. As per a recent update, the last date to file ITR for FY 2018–2019 has been extended 31 August 2019
- From October to November: Verifying your income tax return as per slab
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Income tax surcharge rate and marginal relief – Latest rates
As per the Income Tax Act, if your income falls into the higher tax brackets (particularly the 30% bracket), you have to pay an additional tax called “surcharge” on top of your regular income tax.
This surcharge is applied when your total taxable income crosses specific thresholds. However, to provide relief in borderline cases (where income slightly exceeds the limit), marginal relief is available.
Please note that the rates of surcharge are different under the old and new tax regimes, and also vary for individuals, companies, firms, and others. Let’s understand how:
Surcharge rates for different taxpayers (current rates)
Before 1st April 2023, individuals under the new tax regime who earned incomes above Rs. 5 crore had to pay a surcharge of 37% on their income tax amount.
But from 1st April 2023, the government has reduced the maximum surcharge rate from 37% to 25% (only under the new tax regime).
For more clarity, let’s check out the different surcharge rates for multiple categories of taxpayers:
Surcharge rates for Individuals / HUF / AOP / BOI / Artificial Juridical Persons
Net taxable income |
Surcharge (old tax regime) |
Surcharge (new tax regime) |
Less than Rs. 50 lakhs |
Nil |
Nil |
Rs. 50 lakhs – Rs. 1 crore |
10% |
10% |
Rs. 1 crore – Rs. 2 crore |
15% |
15% |
Rs. 2 crore – Rs. 5 crore |
25% |
25% |
Above Rs. 5 crore |
37% |
25% (Reduced from 37%) |
Notes:
For AOPs (Association of Persons) with only companies as members, surcharge is 15% if the income exceeds Rs. 1 crore.
For long-term capital gains (LTCG) from listed shares, mutual funds, etc., the surcharge is capped at 15%.
Surcharge rates for domestic company
Net taxable income |
Normal provisions |
Under Section 115BAA/ 115BAB |
Less than Rs. 1 crore |
Nil |
10% |
Rs. 1 crore – Rs. 10 crore |
7% |
10% |
Above Rs. 10 crore |
12% |
10% |
Note:
Under Sections 115BAA and 115BAB, surcharge is always 10% (regardless of income).
No threshold is provided for marginal relief under these sections.
Surcharge rates for foreign company
Net taxable income |
Surcharge rate |
Rs. 1 crore – Rs. 10 crore |
2% |
Above Rs. 10 crore |
5% |
Marginal relief for individuals
Marginal relief is a benefit given to taxpayers whose income slightly exceeds the surcharge threshold. Without this relief, such taxpayers would have to pay more tax than the additional income they earned. Let’s understand the associated rules through two cases:
Case 1: Income more than Rs. 50 Lakhs but less than or equal to Rs. 1 Crore
In this case, the taxpayer will be levied a surcharge rate of 10% on the tax amount. As per the current rules,
If the additional tax (including surcharge) on income above Rs. 50 lakhs is more than
The income exceeding Rs. 50 lakhs, the taxpayer gets relief for the excess.
Let’s understand better through an example:
Particulars |
Amount |
Total income |
Rs. 51,00,000 |
Tax payable (including 10% surcharge) [B] |
Rs. 14,76,750 |
Tax if income was Rs. 50,00,000 [C] |
Rs. 13,12,500 |
Extra income earned (Rs. 51,00,000 - Rs. 50,00,000) |
Rs. 1,00,000 |
Extra tax payable [B] - [C] |
Rs. 1,64,250 |
Marginal relief (Rs. 1,64,250 - Rs. 1,00,000) |
Rs. 64,250 |
Final tax liability (excluding cess) (Rs. 14,76,750 - Rs. 64,250) |
Rs. 14,12,500 |
It can be observed that due to the marginal relief, the person is taxed only Rs. 1,00,000 more for earning Rs. 1,00,000 more. The excess Rs. 64,250 is reduced.
Case 2: Income is more than Rs. 1 Crore but less than or equal to Rs. 2 Crore
In this case, the taxpayer will be levied a surcharge rate of 15% on the tax amount. The condition for offering marginal relief is similar to Case 1. However, the excess tax should not be more than the income exceeding Rs. 1 crore.
Again, let’s gain more clarity through an example:
Particulars |
Amount |
Total income |
Rs. 1,01,00,000 |
Tax payable (including 15% surcharge) [B] |
Rs. 32,68,875 |
Tax if income was Rs. 1,00,00,000 [C] |
Rs. 30,93,750 |
Extra income earned (Rs. 1,01,00,000 - Rs. 1,00,00,000) |
Rs. 1,00,000 |
Extra tax payable [B] - [C] |
Rs. 1,75,125 |
Marginal relief (Rs. 1,75,125 - Rs. 1,00,000) |
Rs. 75,125 |
Final tax liability (excluding cess) |
Rs. 31,93,750 |
You can again observe that on an additional income of Rs. 1,00,000, the extra tax payable was Rs. 1,75,125. However, due to marginal relief of Rs. 75,125, the tax payable remains restricted to the additional income earned (i.e. Rs. 1,00,000).
Marginal relief for Firms/LLP/Local Authorities
The applicable surcharge rate is 12% if the income exceeds Rs. 1 crore. If we talk about marginal relief, tax (including surcharge) on income above Rs. 1 crore should not be more than the tax on Rs. 1 crore + excess income.
Let’s understand better through an example:
Particulars |
Amount |
Total income |
Rs. 1,01,00,000 |
Tax payable (including 12% surcharge) [B] |
Rs. 32,24,000 |
Tax if income was Rs. 1,00,00,000 [C] |
Rs. 31,20,000 |
Extra income earned (Rs. 1,01,00,000 - Rs. 1,00,00,000) |
Rs. 1,00,000 |
Extra tax payable [B] - [C] |
Rs. 1,04,000 |
Marginal relief (Rs. 1,04,000 - Rs. 1,00,000) |
Rs. 4,000 |
Final tax liability (excluding cess) |
Rs. 32,20,000 |
Marginal relief for companies
Firstly, check out the income range and corresponding surcharge rates applicable to both domestic and foreign companies:
Income range |
Surcharge rate for domestic companies |
Surcharge rate for foreign companies |
Rs. 1 crore to Rs. 10 crore |
7% |
2% |
More than Rs. 10 crore |
12% |
5% |
Now, please note that for both domestic and foreign companies, marginal relief is allowed so that:
Tax (including surcharge) on higher income
should not be more than the
Tax payable on threshold income (Rs. 1 crore or Rs. 10 crore) plus the extra income earned beyond that threshold
How to know which income tax slab you fall in
To identify which income tax slab you fall under, you must first calculate your taxable income. This is the amount on which tax will actually be charged. Please note that your taxable income depends on:
Your total income and
The tax deductions and exemptions you can claim
To know the slabs applicable to you, follow these simple steps:
Step 1: Know your gross total income
This is the sum of all your income from different sources, such as:
Salary
Rental income
Capital gains
Interest from savings or fixed deposits
Dividends received
Any other income
Step 2: Choose between the old and new tax regime
As a taxpayer, you can choose either the old tax regime or the new tax regime. Each regime has its own tax slabs and rules:
The old tax regime allows you to claim various deductions and exemptions, such as:
Section 80C: Up to Rs. 1.5 lakh (e.g., LIC, PPF, ELSS)
Section 80TTA: Savings account interest up to Rs. 10,000
Section 80CCD(1B): NPS investment up to Rs. 50,000
House Rent Allowance (HRA)
Leave Travel Allowance (LTA)
Standard deduction of Rs. 50,000 from salary or pension
The new tax regime has lower tax rates but fewer deductions, such as:
Standard deduction of Rs. 75,000 for salaried and pensioners and
Deduction under Section 80CCD(2) of up to 14% of basic salary contributed by the employer to NPS
Step 3: Calculate taxable income
In the old regime, you subtract all eligible exemptions and deductions from your gross total income.
In the new regime, only the allowed deductions [Rs. 75,000 and 80CCD(2)] are subtracted.
Now, for more clarity, let’s study an example:
Say your gross total income computed in step I is Rs. 12,00,000.
Case I: You choose the old regime
You claimed deductions of Rs. 2,10,000 [80C + 80TTA + 80CCD(1B)]
Your taxable income is Rs. 9,90,000 (Rs. 12,00,000 – Rs. 2,10,000)
Under the old regime, this amount falls in the Rs. 5,00,001 to Rs. 10,00,000 slab, which is taxed at 20% (excluding cess).
Case II: You choose the new regime
Only deductions of Rs. 75,000 (standard deduction) and 80CCD(2) are allowed.
If the same deductions are not applicable, your taxable income may remain at or close to Rs. 12,00,000.
Suppose your employer contributes Rs. 1,20,000 to NPS, and you also get the Rs. 75,000 deduction. Then:
The total deductions you can claim are Rs. 1,95,000 (Rs. 1,20,000 + Rs. 95,000)
Your taxable income will be Rs. 10,05,000 (Rs. 12,00,000 – Rs. 1,95,000)
In this case, your income falls in the Rs. 10,00,001 to Rs. 12,00,000 slab under the new regime, which is taxed at 15%.
Conclusion: Latest income tax slab and rates - FY 2025-26 (AY 2026-27)
The government has updated the income tax slabs for FY 2025–26, increasing the basic exemption limit to Rs. 4 lakh and extending zero-tax liability up to Rs. 12 lakh, thanks to the enhanced rebate under Section 87A. The new structure includes incremental rates from 5% to 30%, enabling higher savings for most salaried individuals and pensioners who now enjoy a standard deduction of Rs. 75,000.
These changes aim to simplify tax calculations, increase take-home pay for middle-class earners, and encourage compliance through transparent, structured rates. Taxpayers can still opt for the old regime each financial year if preferred. The revised slabs, along with better benefits for NPS contributors and higher exemptions, reflect the government’s commitment to easing the tax burden and promoting financial well-being.
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