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Published on 4 April 2025
Key Changes in India's Income Tax Slabs for Budget 2025
Introduction
The Budget 2025 has introduced substantial modifications to individual income taxation in India, featuring new income tax slabs. Although the revised regime provides fewer deductions and exemptions, its lower tax rates and streamlined structure may benefit many taxpayers compared to the previous tax framework.
New Income Tax Slab Rates
For the financial year 2025-2026, the updated income tax slabs are as follows:
| Income for FY 2025-2026 | Income Tax Rates |
|---|---|
| Income up to ₹4,00,000 | 0% |
| ₹4,00,000 – ₹8,00,000 | 5% on income above ₹4,00,000 |
| ₹8,00,000 – ₹12,00,000 | ₹20,000 + 10% on income above ₹8,00,000 |
| ₹12,00,000 – ₹16,00,000 | ₹60,000 + 15% on income above ₹12,00,000 |
| ₹16,00,000 – ₹20,00,000 | ₹1,20,000 + 20% on income above ₹16,00,000 |
| ₹20,00,000 – ₹24,00,000 | ₹2,00,000 + 25% on income above ₹20,00,000 |
| Above ₹24,00,000 | ₹3,00,000 + 30% on income above ₹24,00,000 |
Additional Provisions
- The standard deduction for salaried individuals has been set at ₹75,000.
- The family pension deduction has been increased from ₹15,000 to ₹25,000.
- The employer's contribution to the National Pension Scheme (NPS) under Section 80CCD (2) is now 14%.
- Resident individuals can claim a rebate of up to ₹60,000 under Section 87A, effectively raising the tax-free income threshold to ₹7,75,000 (after factoring in the standard deduction).
- Exemptions under Section 10(10C) for voluntary retirement, Section 10(10) for gratuity, and Section 10(10AA) for leave encashment remain applicable.
- Deductions for allowances, including daily allowance, transport allowance for individuals with disabilities, and compensation for travel expenses during tours or transfers, continue to be available.
Comparison between New Regime Slabs (FY 2024-25 vs. FY 2025-26)
Here is a comparative analysis of the Income Tax Slab Rates from FY 2024-25 against those in FY 2025-26:
| Income for FY 2024-25 | Income Tax Rates | Income for FY 2025-26 | Income Tax Rates |
|---|---|---|---|
| Income up to ₹3,00,000 | 0% | Income up to ₹4,00,000 | 0% |
| ₹3,00,000 – ₹7,00,000 | 5% on income above ₹3,00,000 | ₹4,00,000 – ₹8,00,000 | 5% on income above ₹4,00,000 |
| ₹7,00,000 – ₹10,00,000 | ₹20,000 + 10% on income above ₹7,00,000 | ₹8,00,000 – ₹12,00,000 | ₹20,000 + 10% on income above ₹8,00,000 |
| ₹10,00,000 – ₹12,00,000 | ₹50,000 + 15% on income above ₹10,00,000 | ₹12,00,000 – ₹16,00,000 | ₹60,000 + 15% on income above ₹12,00,000 |
| ₹12,00,000 – ₹15,00,000 | ₹80,000 + 20% on income above ₹12,00,000 | ₹16,00,000 – ₹20,00,000 | ₹1,20,000 + 20% on income above ₹16,00,000 |
| ₹20,00,000 – ₹24,00,000 | ₹2,00,000 + 25% on income above ₹20,00,000 | Above ₹15,00,000 | ₹3,00,000 + 30% on income above ₹24,00,000 |
| Above ₹15,00,000 | ₹1,40,000 + 30% on income above ₹15,00,000 | Above ₹24,00,000 | ₹3,00,000 + 30% on income above ₹24,00,000 |
With these changes, taxpayers can now better evaluate their financial planning for the 2025-26 financial year and make informed decisions regarding their tax liabilities.