Income Tax Slab Rates for FY 2025-26, AY 2026-27 (New & Old Tax Regime)

In the recent times, significant relaxations has been made in the tax slabs by the government under the new regime. The following article dives deep into the tax slabs and related concepts. 

Income Tax Slab Rates - An Overview

• FY 2025–26 (New Regime): 
  • Up to Rs.4 lakh  - NIL 
  • Rs. 4 lakh - Rs.8 lakh - 5% 
  • Rs.8 lakh - Rs.12 lakh - 10%
  • Rs.12 lakh - Rs.16 lakh - 15% 
  • Rs.16 lakh - Rs.20 lakh - 20% 
  • Rs.20 lakh - Rs.24 lakh - 25% 
  • Above Rs.24 lakh - 30%.
• FY 2024–25 (New Regime): 
  • Up to Rs.3 lakh - NIL
  • Rs.3 lakh - Rs.7 lakh - 5%
  • Rs.7 lakh - Rs.10 lakh - 10%
  • Rs.10 lakh - Rs.12 lakh - 15%
  • Rs.12 lakh - Rs.15 lakh - 20%
  • Above Rs.15 lakh - 30%
• Old Regime:
  • Up to Rs.2.5 lakh - NIL
  • Rs.2.5 lakh - Rs.5 lakh - 5%
  • Rs.5 lakh - Rs.10 lakh - 20%
  • Above Rs. 10 lakh - 30%

Income Tax Slab Rates for Individuals and HUF - FY 2025-26 (New Regime)

The revised tax slabs as announced in Budget 2025 for new regime are as follows:

With the revised tax structure, individuals earning up to Rs.12 lakhs will have no tax liability due to the increased rebate of Rs.60,000. For salaried individuals, the tax liability will be zero for incomes up to Rs.12.75 lakhs due to the Rs.75,000 standard deduction.

Note:

• The marginal relief on the rebate is still applicable. 
• The rebate is not available for income that is taxed at special rates (e.g., capital gains under section 112A).

Income Tax Slab Rates for Individuals and HUF - FY 2024-25 v/s 2023-24 (New Regime)

The following are the peculiar features applicable only for new regime:

• Tax rates are the same for all categories of Individuals, i.e. Individuals, Senior citizens, and Super senior citizens. 
• Rebate: Tax rebate up to Rs.25,000 is applicable if the total income does not exceed Rs.7,00,000 (not applicable for NRIs).  
• Standard Deduction: Allowed for salaried employees is Rs.75,000.
• Deduction under Family Pension: Increased from Rs.15,000 to Rs.25,000. 
• NPS Contribution: The deduction limit on employer's contribution to NPS is 14% for FY 2024-25.
• Surcharge: The highest surcharge rate is 25% as opposed to 37% in the old.
• The new regime is the default tax regime.

Income Tax Slab Rates for Individuals and HUF - FY 2024-25 (Old Regime)

There were no changes made to the tax slabs under the old regime in the budget 2024. The tax slabs under the old regime are as follows:

Note: 

• Surcharge and cess will be applicable.
• Individuals with net taxable income less than or equal to Rs.5 lakh will be eligible for tax rebate u/s 87A under the old tax regime, i.e. tax liability will be NIL.

Income Tax Slab Rates for FY 2019-20, FY 2020-21, FY 2021-22 and FY 2022-23

Income Tax Slab for Individual Aged Below 60 Years & HUF

NOTE:

• Income tax exemption limit is up to Rs.2,50,000 for Individuals, HUF below 60 years aged and NRIs
• Surcharge and cess will be applicable as discussed above 
• An additional 4% Health & education cess will be applicable on the tax and surcharge amount

Income Tax Slab for Individual Aged Above 60 Years to 80 Years

NOTE:

• Income tax exemption limit is up to Rs.3 lakh for senior citizens aged above 60 years but less than 80 years.
• Surcharge and cess will be applicable as discussed above

Income Tax Slab for Individual Aged More Than 80 Years

NOTE:

• Income tax exemption limit is up to Rs.5 lakh for super senior citizen aged above 80 years.
• Surcharge and cess will be applicable as discussed above.

FY 2018-19: Income Tax Slab Rates 

Income Tax Slab for Individual Aged Below 60 Years & HUF

NOTE:

• An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
• Surcharge applicability:
  • 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
  • 15% of income tax, where the total income exceeds Rs.1 crore.

Income Tax Slab for Individuals Aged Above 60 Years to 80 Years

NOTE:

• An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
• Surcharge applicability:
  • 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
  • 15% of income tax, where the total income exceeds Rs.1 crore. 

Income Tax Slab for Individuals Aged More Than 80 Years

NOTE:

• An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
• Surcharge applicability:
  • 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
  • 5% of income tax, where the total income exceeds Rs.1 crore

What is Surcharge?

If income exceeds a certain threshold, additional taxes must be paid over and above existing tax rates. This is an additional tax on High-Income Earners.

Surcharge rates are as below:

 *The highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (applicable from 1st April 2023)

• Surcharge rates of 25% or 37% will not apply to the income from dividends and capital gains taxable under sections 111A (Short Term Capital Gain on Shares), 112A (Long Term Capital Gain on Shares), and 115AD (Tax on the income of Foreign Institutional Investors). Therefore, the highest surcharge rate on the tax payable for such incomes will be 15%.
• The surcharge rate for an Association of Persons (AOP) consisting entirely of companies will also be limited to 15%.
• Additional Health and Education cess at the rate of 4% will be added to the income tax liability.

Comparative Analysis of Income Tax Slabs Under Old vs. New Regime

Let us understand income tax slab rates under the old regime and the new regime using the following illustrations. The following examples also explain the tax slab rates of FY 2025-26 along with FY 2024-25:

Case -1: When the Income is Rs.10 lakhs 

Particulars of Income and Deductions

Salary Income: 10 lakhs

Deductions available: 

1. HRA -  Rs .1.6 lakh
2. LTA - Rs. 30,000
3. Children Education Allowance -  Rs.9,600
4. Professional Tax - Rs.2,400
5. Medical Insurance Premium  - Rs.50,000
6. Education loan - Rs.55,000
7. Investment Deductions u/s 80C - Rs.60,000

Tax Calculation Under Both the Regime for FY 2024-25

In the above case, the old regime has resulted in lesser tax by Rs. 13,936. Though the new-regime has provided relaxed slab rates, old regime taxation is more beneficial in this case only because of many tax saving deductions. If the deductions were lesser, the new regime slab rates could have been more beneficial.

For FY 2025-26

For the same net income under new regime, the taxes would be nil for FY 2025-26 since income up to Rs.12 lakhs would be practically zero taxable, owing to increased rebate and further relaxed slab rates.

Case-2: When the Income is Rs.15 lakhs

Particulars of Income and Deductions

Salary Income: 15 lakhs

Deductions available: 

1. HRA -  Rs .1.6 lakh
2. LTA - Rs. 30,000
3. Children Education Allowance -  Rs.9,600
4. Professional Tax - Rs.2,400
5. Medical Insurance Premium  - Rs.50,000
6. Education loan - Rs.55,000
7. Investment Deductions u/s 80C - Rs.60,000

Tax calculation under both the regime for FY 2024-25:

In the above case, the taxation under new regime is beneficial despite numerous tax saving deductions, which has primarily arisen because of relaxed slab rates. As, income increases, new regime slab rates would be more beneficial, unless we have more tax saving deductions exclusively available for taxation under old regime.

For FY 2025-26

For the same income and deductions under slab rates applicable for FY 2025-26, the new regime would be still more beneficial, resulting in net tax payable of Rs.97,500, as compared to Rs.1.3 lakhs tax of previous financial year. This, is also primarily due to further relaxed slab rates

Case -3: When Income is 20 lakhs

Particulars of Income and Deductions

Salary Income: 15 lakhs

Deductions available: 

1. HRA -  Rs .1.6 lakh
2. LTA - Rs. 30,000
3. Children Education Allowance -  Rs.9,600
4. Professional Tax - Rs.2,400
5. Medical Insurance Premium  - Rs.50,000
6. Education loan - Rs.55,000
7. Investment Deductions u/s 80C - Rs.60,000

Tax calculation under both the regime for FY 2024-25

In the above case also, the new regime is beneficial, despite numerous tax saving deductions. This is primarily because of the relaxed slabs under the new regime, though many deductions are not available under the same.

For FY 2025-26

For the financial year 2025-26, the tax incidence further falls to Rs.1,92,400 as compared to Rs.2.78 lakhs in FY 2024-25. This is also fully because of slab rates relaxed further for FY 2025-26.

Final Word

The changes made for FY2025-26 in the slab rates has practically nullified the tax liability of people who earn income up to Rs. 12 lakhs under the new regime. Rebates are not allowed for income taxed at special rates. Similarly, significant relaxations was also made for tax slabs for FY2024-25 under the new regime. Knowledge of the basic provisions for the slab rates helps the taxpayers ascertain the best tax saving strategy and save taxes wisely.

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