April 1st marks the beginning of the financial new year. As we move into FY 2025-26, you, as a taxpayer, should be aware of the new income tax slabs and rates along with other updates. Budget 2025 introduced several changes in the existing tax structure with an aim to make things simpler and more beneficial.
Before you explore the various other updates, you should be clear on the most important aspects of the taxation system - the tax slabs and rates. Whether you are a salaried individual, self-employed, or retired, knowing which new income tax slab applies to you helps with better planning, saving, and smooth income tax return filing.
Income Tax Slabs and Rates for FY 2025-26 Under the New Regime
There are presently two tax regimes in India - the old and the new (the default regime). The income slabs and their respective tax rates differ between the two. Note that Budget 2025 only led to changes in the tax slabs and rates in the new regime.
Let’s look at the new tax regime slabs for FY 2025-26 (AY 2026-27)
Annual Income Slabs
| Income Tax Rates
|
Till ₹4 lakh
| NIL
|
From ₹ 4 lakh to ₹8 lakh
| 5%
|
From ₹8 lakh to ₹12 lakh
| 10%
|
From ₹12 lakh to ₹16 lakh
| 15%
|
From ₹16 lakh to ₹20 lakh
| 20%
|
From ₹20 lakh to ₹24 lakh
| 25%
|
More than ₹24 lakh
| 30%
|
Now that the new tax regime slabs for FY 2025-26 are clear, let’s note some key points:
- A rebate of ₹60,000 and a standard deduction of ₹75,000 is available for salaried individuals and pensioners under the new regime. This means that individuals earning up to ₹12,00,000 and salaried employees with an annual income of up to ₹12,75,000 will have zero tax liability.
- While the new regime offers concessional tax rates, no deductions under Sections 80C, 80D, or HRA are allowed within it (except for specific cases like NPS employer contribution).
- Also, the new tax regime slabs and rates are the same for everyone, i.e., individuals, senior citizens, and super senior citizens.
- The new tax regime is ideal for those who prefer lower rates and who do not have many investments or deductions.
Income Tax Slabs and Rates for FY 2025-26 Under the Old Regime (Below 60 years)
Taxpayers can choose between the old and new regime as per their preferences. Notably, the old regime has different tax rates for individuals under 60 years of age, senior citizens, and super senior citizens.
For those under 60 years of age, these are the income tax slabs for FY 2025-26 under the old regime:
Annual Income Slabs
| Income Tax Rates for People < 60 years & Non-Resident Indians (NRIs)
|
Till ₹2.5 lakh
| NIL
|
From ₹2.5 lakh to ₹5 lakh
| 5%
|
From ₹5 lakh to ₹10 lakh
| 20%
|
More than ₹10 lakh
| 30%
|
The old regime allows for multiple deductions, such as:
- Up to ₹1.5 lakhs deduction under Section 80C (against life insurance premiums, investments in PPF and ELSS, and more)
- Up to ₹25,000 deduction (₹50,000 for senior citizens) against health insurance premiums under Section 80D
- House Rent Allowance (HRA)
- A standard deduction of ₹50,000
- Deduction against the interest repayment of an education loan under Section 80E
- Deductions against donations made to specified charitable institutions and relief funds under Section 80G.
The old tax regime is beneficial for those who have tax-saving investments in their portfolio.
If you want to get clarity on your tax liability in both regimes, consider using an income tax calculator. It will give you an estimate of the tax payable in both cases so that you can make an informed decision.
Income Tax Slabs and Rates for FY 2025-26 for Senior Citizens (Aged 60–79 years)
Under the old regime, the income tax slabs for senior citizens for FY 2025-26 are as follows:
Annual Income Slabs
| Tax Rates for People Aged 60 Years to 80 years (Resident Individuals)
|
Up to ₹3 lakh
| NIL
|
From ₹3 lakh to ₹5 lakh
| 5%
|
From ₹5 lakh to ₹10 lakh
| 20%
|
More than ₹10 lakh
| 30%
|
As the above table shows, the income tax slabs for senior citizens under the old regime provide a slightly higher exemption limit. Those over 60 years of age also enjoy additional benefits in the old regime, such as an increase in the Section 80D deduction amount (₹50,000 for those over 60 years compared to ₹25,000 for those under 60 years) against health insurance premiums.
Income Tax Slabs and Rates for FY 2025-26 for Super Senior Citizens (80 years and above)
For super senior citizens, the basic exemption is even higher:
Annual Income Slabs
| Tax Rates for People aged above 80 Years (Resident Individuals)
|
Up to ₹5 lakhs
| NIL
|
From ₹5 lakh to ₹10 lakh
| 20%
|
More than ₹10 lakh and above
| 30%
|
For those over 80 years of age, no tax is payable up to ₹5 lakh income.
Income Tax Slabs and Rates for FY 2024-25 (Pre-Budget 2025 Update)
Before the new income tax slabs were introduced in Budget 2025, the income tax structure was slightly different.
Under the New Regime
Here’s a look at the new regime tax slabs for FY 2024-25 (AY 205-26):
Annual Income Slabs
| Income Tax Rates
|
Up to ₹3 lakh
| NIL
|
From ₹3 lakh to ₹7 lakh
| 5%
|
From ₹7 lakh to ₹10 lakh
| 10%
|
From ₹10 lakh to ₹12 lakh
| 15%
|
From ₹12 lakh to ₹15 lakh
| 20%
|
More than ₹15 lakh
| 30%
|
Along with the new regime tax slabs, here is what to note when completing your income tax return filing for FY 2024-25 under the new regime:
- If your total income is up to ₹7,00,000, you can claim a tax rebate of up to ₹25,000 under the new regime, which makes your tax liability zero. (Note: This rebate is not available to NRIs.)
- Salaried individuals can claim a standard deduction of ₹75,000 under the new regime.
- If you receive a family pension, the deduction limit for the same is ₹25,000 for FY 2024-25.
Under the Old Regime (FY 2024-25)
The tax slabs and rates under the old regime for FY 2024-25 are the same as FY 2025-26 for each age group.
Along with changes in the tax slabs and rates, Budget 2025 brought along several updates in prevailing tax laws. These changes will be effective from FY 2025-26, i.e., from 1st April 2025 onwards. As a taxpayer, you must be aware of these updates to ensure a smooth income tax return filing process in the coming year.
Major Tax Updates Effective from FY 2025-26
Here are some of the key changes introduced in the Budget 2025:
Increased Rebate under Section 87A
Under the new regime, taxpayers with income up to ₹12 lakh now get a rebate of ₹60,000, which makes their income tax-free. When paired with the ₹75,000 standard deduction, it leads to zero tax liability for salaried individuals earning up to ₹12,75,000. This makes the new income tax slabs even more attractive for those who do not have major tax-saving investments.
Revised TDS Threshold
The TDS threshold has been revised for several sections, including bank interest rates, insurance commissions, rent, dividends, and more.
NPS Vatsalya
The government proposed the introduction of NPS (National Pension Scheme) in Vatsalya during Budget 2025. By investing in this child-focused investment plan, you can enjoy an additional tax deduction of up to ₹50,000 under Section 80CCD(1B) of the Income Tax Act. This benefit comes on top of the existing ₹1.5 lakh deduction available under Section 80C.
ULIP Taxation
Those ULIP policies whose annual premiums are more than ₹2.5 lakh are now taxable on maturity proceeds. The income from such ULIPs will be considered at par with capital gains and will be treated as such.
Removal of Conditions to Claim Two Houses as Self-Occupied
Until FY 2024-25, a taxpayer could only declare two house properties as self-occupied with nil annual value if they could not reside in them due to job or business obligations elsewhere. But starting FY 2025-26, this condition has been removed. Now, you can treat up to two properties as self-occupied and report zero income from them, irrespective of the reason for not living there.
Updated ITR Time Limit Extended
The deadline to file an Updated Income Tax Return (ITR-U) has been extended from 24 months to 48 months (4 years) from the end of the relevant assessment year. This allows for a larger time frame for any taxpayer to come forward with any previous errors and pay the due taxes without facing harsh penalties. However, the longer you wait, the more you may end up paying in additional tax.
Always use an income tax calculator to estimate your tax liability beforehand and avoid errors. While there is always a chance to file an ITR-U, it is ideal to accurately complete the filing process the first time.
The new income tax slabs and rates for FY 2025-26 greatly differ from the rates applicable in previous years, for the new regime taxpayers. If you are opting for the old regime, the rates remain the same. Regardless of which regime you prefer, make sure to be updated with changing tax laws to make informed decisions. Being an aware taxpayer will allow you to optimise your tax savings with confidence.
** Tax exemptions are as per applicable tax laws from time to time.
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