income tax
Published on 5 August 2025
Income Tax Slab Rates for FY 2025-26: A Comprehensive Guide
Income Tax Slab Rates FY 2025–26 (AY 2026–27): Everything You Need to Know
As tax season approaches, understanding the latest income tax slabs becomes essential for both planning and compliance. The Union Budget 2025 introduced notable changes to the new tax regime, which now serves as the default system. However, the old regime still remains available for those who opt in and claim deductions.
1. Why Slab Awareness Matters
Choosing the right regime can lead to significant tax savings. While the new regime offers lower, simpler rates, the old regime favors those with multiple deductions—under Sections 80C, 80D, HRA, etc. Knowing your eligibility and structure helps you file efficiently and avoid penalties.
2. New Regime Slab Rates for Individuals & HUFs (FY 2025–26)
| Income Range (₹) | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard Deduction: ₹75,000 for salaried employees and pensioners Section 87A Rebate: Up to ₹60,000 – making income up to ₹12 lakh tax-free (after standard deduction)
3. Old Regime Slab Rates for FY 2025–26
| Income Range (₹) | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Higher Basic Exemption for Senior Citizens:
- Ages 60–79: ₹3,00,000
- Ages 80+: ₹5,00,000
Section 87A Rebate: ₹12,500 for income up to ₹5 lakh
4. What Changed in FY 2025–26?
- Basic Exemption (New Regime): Increased from ₹3 lakh to ₹4 lakh
- Rebate Limit (New Regime): Raised from ₹25,000 to ₹60,000
- Middle Slabs Slashed: Greater relief for mid-income earners
- New Regime is Default: Must opt out to use old regime benefits
5. Surcharge & Cess (Applicable to Both Regimes)
| Income Range | Surcharge |
|---|---|
| ₹50 lakh – ₹1 crore | 10% |
| ₹1 crore – ₹2 crore | 15% |
| ₹2 crore – ₹5 crore | 25% |
| Above ₹5 crore | 25% |
Cap on Capital Gains Surcharge (under Sections 111A, 112A, 115AD): 15% Health & Education Cess: Additional 4% on total tax + surcharge
6. Quick Tax Example: ₹10,00,000 Income (Individual <60)
New Regime (after ₹75,000 standard deduction):
- Taxable Income: ₹9.25 lakh
- Eligible for ₹60,000 rebate → Net Tax: ₹0
Old Regime (no deductions assumed):
- ₹2.5 lakh: Nil
- ₹2.5 lakh @ 5% = ₹12,500
- ₹5 lakh @ 20% = ₹1,00,000
- Total Tax = ₹1,12,500 + 4% cess = ₹1,17,000
7. New vs Old Regime Comparison Table
| Income | New Regime | Old Regime* |
|---|---|---|
| ₹6 lakh | ₹0 (after rebate) | ₹0 (after rebate) |
| ₹10 lakh | ₹0 (after rebate) | ₹1,12,500 + cess |
| ₹15 lakh | Varies – lower than old regime | ₹2,62,500 + cess |
* Old regime may offer lower taxes if claiming deductions (80C, HRA, etc.)
8. Frequently Asked Questions (FAQs)
Q1: Can I claim deductions under 80C in the new regime? No. Most exemptions and deductions (80C, 80D, HRA, etc.) are not available. Only standard deduction, NPS (section 80CCD(2)), and EPF employer contributions are allowed.
Q2: Is the new regime mandatory? No, but it is default. You must opt out if you prefer to use the old regime with deductions.
Q3: Who benefits more from the new regime? Salaried individuals or pensioners with few deductions typically benefit more, especially if their income is up to ₹12 lakh.
Q4: Can I switch regimes every year? Yes, if you're a salaried individual. Businesses must commit to one regime for a longer period.
9. Final Filing Tips
- Evaluate both regimes using an ITR calculator before filing
- Check all deductions you’re eligible for—especially under old regime
- Opt out of the new regime before return filing if the old regime works better
- Don’t miss deadlines; late returns invite *penalties and interest