Income Tax Slab FY 2025-2026
The Union Budget 2025 has reshaped the income tax landscape, bringing key revisions to tax Income Tax Slab FY 2025-2026 and deductions for FY 2025-26. With an aim to simplify taxation while balancing revenue needs, the government has introduced adjustments that affect both salaried individuals and businesses. While the new regime offers lower tax rates, it limits traditional exemptions, requiring taxpayers to reassess their financial planning strategies. Understanding these changes is crucial to optimizing tax liabilities and making informed investment decisions. Let’s take a closer look at the revised income tax slabs and their implications.
Income Tax Slabs for FY 2025-26 (New Regime)
Budget 2025 has introduced revisions to the new tax regime under Section 115BAC. Here’s a look at the updated income tax slab rates:
| Slab | Tax Rate (%) |
| ₹ 0 – ₹ 400,000 | 0% |
| ₹ 4,00,001 – ₹ 800,000 | 5% |
| ₹ 800,001 – ₹ 12,00,000 | 10% |
| ₹ 1200,001 – ₹ 1600,000 | 15% |
| ₹ 16,00,001 – ₹ 20,00,000 | 20% |
| ₹ 20,00,001 – ₹ 24,00,000 | 25% |
| Above ₹ 24,00,0000 | 30% |
- The maximum rebate available is ₹60,000 for incomes up to ₹12 lakh. Marginal relief applies where applicable. However, these slab rates do not apply to special income categories such as STCG, LTCG, cryptocurrency, lottery winnings, betting, and gaming.
Above Rates are applicable for Financial Year 2025-2026.For Financial Year 2024-2025 Existing Rates are applicable which are as follows.
Income Tax Slabs for FY 2024-25 (New Regime)
| Slab | Tax Rate (%) |
| ₹ 0 – ₹ 300,000 | 0% |
| ₹ 300,001 – ₹ 600,000 | 5% |
| ₹ 600,001 – ₹ 9,00,000 | 10% |
| ₹ 900,001 – ₹ 1200,000 | 15% |
| ₹ 12,00,001 – ₹15,00,000 | 20% |
| Above ₹ 1500,0000 | 30% |
- Under Section 87A, individuals with a taxable income of up to ₹7 lakh are eligible for a full rebate, resulting in zero tax liability. Marginal relief is also available where applicable. However, these slab rates do not apply to special income sources such as STCG, LTCG, cryptocurrency, lottery winnings, betting, and gaming.
For Detailed Information, you can visit www.incometax.gov.in
Unlike the new tax regime, the old tax regime allows taxpayers to claim various exemptions and deductions, such as HRA, Section 80C, 80D, and others. Here’s the tax rate structure under the old regime:
Income Tax Slabs for Old Tax Regime (FY 2024-25 & FY 2025-26)
| Slab | Tax Rate (%) |
| ₹ 0 – ₹ 250,000 | 0% |
| ₹ 2,50,001 – ₹ 500,000 | 5% |
| ₹ 600,001 – ₹ 9,00,000 | 10% |
| ₹ 900,001 – ₹ 1200,000 | 15% |
| ₹ 12,00,001 – ₹15,00,000 | 20% |
| Above ₹ 1500,0000 | 30% |
Key Points:
✅ Standard deduction of ₹50,000 available for salaried individuals.
✅ Taxpayers can claim deductions under Section 80C (₹1.5 lakh), 80D (medical insurance), HRA, and more.
✅ A rebate under Section 87A is available for incomes up to ₹5 lakh, resulting in zero tax liability.
✅ Surcharge applies for higher income brackets:
- 10% for income between ₹50 lakh – ₹1 crore
- 15% for ₹1 crore – ₹2 crore
- 25% for ₹2 crore – ₹5 crore
- 37% for above ₹5 crore
Deductions Available in the New Tax Regime (FY 2024-25 & FY 2025-26)
The new tax regime under Section 115BAC offers lower tax rates but limits most deductions and exemptions available in the old tax regime. However, a few deductions and benefits are still available:
- Under Section 80CCD(2), employees can claim a deduction for their employer’s contribution to their NPS account. As per Budget 2024, this deduction has been increased from 10% to 14% of the salary for government employees.
- Under the new tax regime, a standard deduction of ₹75,000 is available for both salaried individuals and pensioners.
- Under Section 80CCH(2), contributions made to the Agniveer Corpus Fund qualify for a deduction.
- Under Section 57(iia), a deduction is available for the family pension scheme, capped at ₹25,000 or one-third of the family pension, whichever is lower.
- A conveyance allowance is provided to cover expenses incurred by an employee while performing their job duties.
- Specially-abled individuals receive a transport allowance to support their commuting expenses.
- Daily allowance received in order to meet the ordinary expenses due to his absence from the place of duty.
- An allowance is provided to cover expenses related to tours, transfers, or travel.
- Perquisites granted for official duties.
- Exemptions are available for voluntary retirement under Section 10(10C), leave encashment under Section 10(10AA), and gratuity under Section 10(10).
- Gifts received up to ₹50,000 are exempt from tax.
- Interest paid on a home loan for a let-out property is deductible under Section 24.
Now we will discuss about the deductions which are not available in New Tax Regime.
Exemptions and Deductions NOT Available Under the New Tax Regime
The new tax regime under Section 115BAC offers lower tax rates but removes many exemptions and deductions available in the old regime. Below are the key exemptions and deductions that CANNOT be claimed:
- Section 80C: No deduction for investments like PPF, ELSS, NSC, LIC, tuition fees, etc.
- Section 80D: No deduction for health insurance premiums.
- Section 80E: No deduction for education loan interest.
- Section 80G: No deduction for donations to charitable institutions.
- Section 80TTA & 80TTB: No exemption for savings accounts or senior citizens’ interest income.
- Section 32(1)(iia):Additional Depreciation under section 32(1)(iia).
- Deductions under section 32AD, 33AB, and 33ABA.
- Deductions for donations or expenses related to scientific research are available under sections 35(2AA), 35(1)(ii), 35(1)(iia), and 35(1)(iii).
- Deductions under section 35AD and 35CCC
- Chapter VI-A deductions (except Section 80CCD(2) and Section 80JJAA).
- Exemptions and deductions for various allowances and perquisites, including a food allowance of ₹50 per meal, limited to a maximum of two meals per day.
- Contributions given to a trust or a political party
- Employee’s contribution to the National Pension System (NPS).
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Interest on Home Loan for Self-Occupied Property (Section 24(b))
- Standard Deduction for Business Income
- Professional Tax Deduction
- Entertainment Allowance & Other Special Allowances under section 10(14).
- Helper Allowance
- Minor child income allowance.
- Allowance to MPs/MLAs
- Children’s education allowance.
House Property Loss Under the New Tax Regime
The new tax regime under Section 115BAC comes with simplified tax rates but limits several deductions and exemptions, including those related to house property loss.
Key Changes for House Property Loss in the New Tax Regime:
No Set-Off Against Other Income:
- Under the old tax regime, if you had a loss from house property (e.g., interest on a home loan exceeding rental income), you could adjust up to ₹2 lakh against other income (like salary or business income).
- In the new tax regime, this set-off is not allowed.
No Carry Forward of Losses:
- In the old regime, if your house property loss exceeded ₹2 lakh, the remaining amount could be carried forward for 8 years and adjusted against future house property income.
- The new tax regime does not permit carry forward of such losses.
Deduction Allowed for Rental Income:
- If the house is rented out, interest on a home loan can still be deducted but only against rental income, not against salary or other earnings.
You may also read Income Tax Slab before budget
