Income Tax Slabs and Rates for FY 2025-26 (AY 2026-27)

Q: What is the previous year and assessment year?

In income-tax law, the "Previous Year" is the period from April 1st to March 31st when income is earned. The following year is the "Assessment Year," where this income is evaluated for tax purposes. For instance, FY 2023-24 is assessed in AY 2024-25.

Q: What is the 80C limit for FY 2024 25?

The maximum limit for claiming tax benefits under Section 80C remains at Rs. 1.5 lakh for FY 2024-25, the same as the current fiscal year 2023-24. This limit allows individuals to reduce their taxable income by investing in specified instruments like EPF, PPF, ELSS, NSC, and paying life insurance premiums.

Q: Is 7 lakh income tax free?

In the old regime, individuals are exempt from paying tax if their taxable income (after deductions) is less than Rs. 5 lakh. Conversely, in the New Regime, the entire income remains tax-free if the taxable income falls below Rs. 7 lakh.

Q: Can I claim 80C deductions and opt for a new income tax slab regime?

No, individuals cannot claim 80C deductions and opt for the new income tax slab regime simultaneously. Under the new tax regime, most deductions under Section 80C are not applicable. Taxpayers opting for the new regime must forgo these deductions, impacting their taxable income and overall tax liability.

Q: What is the meaning of rebate under section 87A under the IT Act?

Section 87A rebate aids taxpayers in diminishing their income tax burden. This rebate is applicable if your total income, post Chapter VIA deductions, does not surpass Rs 5 lakh in FY 2023-24. Utilizing this rebate results in a nullification of your income tax liability.

Q: How to calculate surcharge on income tax?

Begin by computing the income tax, equivalent to 30% of the taxable income, totaling Rs 18 lakh. Then, apply the surcharge rate of 10%, resulting in a surcharge amounting to 10% of Rs 19 lakh, totaling Rs 1.9 lakh.

Q: What is the basic exemption limit for FY 24 25?

The basic exemption limit under the new tax regime for FY 2024-25 has been set at Rs. 3 lakh (this limit is Rs. 2.5 lakh in the old regime). This implies that individuals do not have to pay tax on income up to Rs. 3 lakh. After the latest Union Budget 2024 changes, the new tax regime features five income tax slabs with rates ranging from 5% to 30%.

Q: What is the rebate under section 87A for FY 2024 25?

The rebate under Section 87A for FY 2024-25 is Rs. 25,000 for the new tax regime, applicable for taxable income up to Rs. 7 lakh. This means that individuals with taxable income within this range will not pay any income tax after claiming the rebate.

Q: Which is better old regime or new regime?

The choice between the old and new regime after the Union Budget 2024 changes depends on your financial situation and tax preferences. The new regime, with its lower tax rates and simplicity, can be advantageous for individuals with fewer deductions and exemptions. For FY 2024-25, the new regime offers reduced rates and makes it an attractive option when you do not have deductions to claim. On the other hand, the old regime allows for deductions like those under section 80C (Rs. 1,50,000), section 80D (Rs. 25,000/ Rs. 50,000), and more. These deductions can benefit those with significant eligible expenses. Hence, if your deductions are substantial, the old regime could result in lower taxes despite its complexity.

Q: Is 80C applicable in the new tax regime?

No, the new tax regime no longer permits deductions under Chapter VI-A, which encompass widely used deductions such as 80C (pertaining to investments), 80D (for medical insurance premiums), and 80E (relating to education loan interest).

The new tax slabs were announced by Union Finance Minister Nirmala Sitharaman during the presentation of the Union Budget 2025. The new income tax slabs and rates for FY 2025-26 (AY 2026-27) are as follows: Rs. 0 to Rs. 4,00,000 (nil), Rs. 4,00,001 to Rs. 8,00,000 (5%), Rs. 8,00,001 to Rs. 12,00,000 (10%), Rs. 12,00,001 to Rs. 16,00,000 (15%), Rs. 16,00,001 to Rs. 20,00,000 (20%), Rs. 20,00,001 to Rs. 24,00,000 (25%), and income above Rs. 24,00,000 will be taxed at 30%.

3 mins read

13-Feburary-2025

Latest income tax slabs for FY 2025-26 after budget 2025

The finance minister Nirmala Sitharaman has introduced significant changes to the income tax slabs under the new tax regime in the Union Budget 2025. These new slabs will come into effect from April 1, 2025, for the financial year 2025-26. The restructuring of tax slabs aims to simplify the tax system and offer relief to taxpayers across different income brackets. The revised slabs under the new tax regime are as follows:

Rs 0 - Rs 4 lakh: Nil tax
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%

The changes are expected to significantly reduce the tax burden on individuals, with potential tax savings of up to Rs 1.14 lakh per annum. Moreover, the new tax regime continues to remain the default tax regime, meaning taxpayers must actively opt for the old regime if they wish to claim deductions and exemptions available under it.

A major highlight of the Budget 2025 tax reforms is the increase in tax rebate under Section 87A. The rebate has been raised to Rs 60,000, ensuring that individuals with a net taxable income of up to Rs 12 lakh pay no income tax. This marks a substantial increase from the previous rebate limit of Rs 25,000, which applied to incomes up to Rs 7 lakh. Consequently, lower and middle-income taxpayers stand to benefit significantly from this reform.

Additionally, the basic exemption limit has been revised upwards from Rs 3 lakh to Rs 4 lakh under the new tax regime. This move aligns with inflationary trends and ensures that individuals in lower-income brackets receive relief. The higher exemption threshold also reduces the number of taxpayers required to file returns, easing compliance burdens.

Despite these changes, deductions under the new tax regime remain unchanged. Salaried individuals can continue to claim a standard deduction of Rs 75,000 from salary income, along with an employer’s contribution of 14% of the basic salary to the NPS Tier-I account. This ensures some level of tax benefit for salaried individuals, even without the traditional deductions allowed under the old regime.

The surcharge rates on income tax liability remain unchanged for FY 2025-26. This stability provides predictability for high-income earners, ensuring no additional tax burden beyond the standard slab rates.

While no significant modifications have been made to the old tax regime, one noteworthy change is the introduction of an additional deduction under Section 80CCD (1B) for parents investing in NPS Vatsalya for their children. This deduction, available over and above the Rs 1.5 lakh limit under Section 80C, allows an additional investment of up to Rs 50,000 in NPS to qualify for tax benefits. Furthermore, the tax rebate of Rs 12,500 remains unchanged for individuals with taxable incomes up to Rs 5 lakh under the old regime.

The primary distinction between the old and new tax regimes continues to be the availability of deductions and exemptions. While the new regime offers lower tax rates, it does not allow popular deductions such as Section 80C (Rs 1.5 lakh for specified investments), Section 80D (Rs 25,000/Rs 50,000 for health insurance premiums), and Section 80TTA (Rs 10,000 deduction for savings account interest). Taxpayers must carefully evaluate which regime is more beneficial based on their financial situation.

Under the old tax regime, the basic exemption limit is determined by age. For individuals below 60 years, it remains at Rs 2.5 lakh. Senior citizens (aged 60-79 years) have an exemption limit of Rs 3 lakh, while super senior citizens (aged 80 and above) benefit from a higher limit of Rs 5 lakh. This age-based slab structure continues to be a distinguishing factor of the old tax regime.

Taxpayers must specifically choose the old regime while filing their income tax returns, as the new regime is the default option. Those without business income can switch between the two regimes annually. However, taxpayers with business income can switch from the old to the new tax regime only once in a lifetime. Once they opt for the new regime, they cannot revert to the old regime in subsequent years.

Overall, the revised tax structure aims to simplify compliance, reduce tax liability, and encourage more individuals to transition to the new regime. With enhanced rebates and lower tax rates, the government seeks to make the new tax regime the preferred choice for a majority of taxpayers.

Pro tip

EFFORTLESS investing | FLEXIBLE options | ROBUST growth
Access diverse Mutual Funds conveniently.
Exclusively on our digital platform.

New income tax slab and rates for FY 2025-26 (AY 2026-27) after budget 2025

Budget 2025 has introduced revised income tax slab and rates for the new tax regime applicable for FY 2025-26 (AY 2026-27). The new slabs provide tax relief, with incomes up to Rs 4 lakh exempt. The revised structure simplifies compliance, offering lower rates while maintaining the new regime as the default option.

Income tax slabs (Rs.)	Income tax rate (%)
Rs. 0 - Rs. 4 lakh	NIL
Rs. 4 - Rs. 8 lakh	5%
Rs. 8 - Rs. 12 lakh	10%
Rs. 12 - Rs. 16 lakh	15%
Rs. 16 - Rs. 20 lakh	20%
Rs. 20 - Rs. 24 lakh	25%
Above Rs. 24 lakh	30%

Additionally, the tax deduction limit for senior citizens has been doubled from Rs. 50,000 to Rs. 1 lakh, providing further relief to elderly taxpayers.

The Finance Minister stated that these tax revisions would result in the government foregoing Rs. 1 lakh crore in direct tax revenue and Rs. 2,600 crore in indirect taxes.

Understanding the new tax slabs (FY 2025-26 and AY 2026-27)

The government has introduced a new slab system under the new tax regime, making incomes up to Rs. 12 lakh completely tax-exempt. This change benefits a large section of taxpayers, reducing the overall tax burden and increasing disposable income. For salaried individuals, the tax-free limit is extended to Rs. 12.75 lakh, factoring in the Rs. 75,000 standard deduction.

However, once an individual's taxable income exceeds Rs. 12 lakh, tax applies to the entire taxable income based on the following revised rates:

Taxable Income (Rs.)	Tax Rate (%)
0 - 12,00,000	Nil
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%

This marks a significant shift from the previous tax regime, where any income above Rs. 15 lakh was taxed at a flat 30% rate. With the revised brackets, individuals earning between Rs. 12 lakh and Rs. 24 lakh will see substantial tax savings, making the new tax regime more appealing for middle- and high-income earners. The changes aim to simplify tax compliance and offer financial relief to a broader section of taxpayers.

Tax Savings Breakdown Under the New Regime

Existing Tax Savings

Income Bracket	Tax Savings
Rs. 3 lakh to Rs. 7 lakh	Rs. 20,000
Rs. 7 lakh to Rs. 10 lakh	Rs. 30,000
Rs. 10 lakh to Rs. 12 lakh	Rs. 30,000
Rs. 12 lakh to Rs. 15 lakh	Rs. 60,000
Total Tax	Rs. 1,40,000

Proposed Tax Savings

Income Bracket	Tax Savings
Rs. 4 lakh to Rs. 8 lakh	Rs. 20,000
Rs. 8 lakh to Rs. 12 lakh	Rs. 40,000
Rs. 12 lakh to Rs. 15 lakh	Rs. 45,000
Total Tax	Rs. 1,05,000

Net Tax Savings: Rs. 35,000 for those earning Rs. 15 lakh annually, even without the Section 87A rebate.

Upcoming Changes & Policy Announcements

The government will table the new Income Tax Bill next week, which aims to further the spirit of Nyay (justice), as outlined in the Bharatiya Nyay Sanhita.
The Tax Deduction at Source (TDS) regime will be rationalized to simplify compliance for taxpayers.
The FM emphasized that reforms are not an end goal but a means to achieve good governance and economic progress.

Official Statement from FM Office:

A tweet from the Finance Minister's office highlighted the key takeaways:

Zero Income Tax up to ₹12 lakh under the New Tax Regime
Slabs and tax rates revised across the board to benefit all taxpayers
The new structure aims to significantly reduce the tax burden on the middle class, leaving more money in their hands to boost consumption, savings, and investments
Nil tax slab extended up to ₹12.75 lakh for salaried taxpayers, factoring in a standard deduction of ₹75,000

#ViksitBharatBudget2025 #UnionBudget2025

Stay tuned for further details once the new Income Tax Bill is tabled next week.

What is the tax benefit for different category of taxpayers (0-24 lakhs)

Total Income	Tax Calculation as per Existing Rates (Finance (No.2) Act, 2024)	Tax Calculation as per Proposed Rates	Benefit from Revised Tax Rates/Slabs	Rebate Advantage (Based on Proposed Rates)	Overall Benefit (Compared to Current Slab Rates)	Tax Payable Under the New Regime
Column: 1	Column: 2	Column: 3	Column: 4 = Column 3 – Column 2	Column: 5	Column: 6 = Column 4+ Column 5	Column: 7
8 lakh	30,000	20,000	10,000	20,000	30,000	0
9 lakh	40,000	30,000	10,000	30,000	40,000	0
10 lakh	50,000	40,000	10,000	40,000	50,000	0
11 lakh	65,000	50,000	15,000	50,000	65,000	0
12 lakh	80,000	60,000	20,000	60,000	80,000	0
13 lakh	1,00,000	75,000	25,000	0	25,000	75,000
14 lakh	1,20,000	90,000	30,000	0	30,000	90,000
15 lakh	1,40,000	1,05,000	35,000	0	35,000	1,05,000
16 lakh	1,70,000	1,20,000	50,000	0	50,000	1,20,000
17 lakh	2,00,000	1,40,000	60,000	0	60,000	1,40,000
18 lakh	2,30,000	1,60,000	70,000	0	70,000	1,60,000
19 lakh	2,60,000	1,80,000	80,000	0	80,000	1,80,000
20 lakh	2,90,000	2,00,000	90,000	0	90,000	2,00,000
21 lakh	3,20,000	2,25,000	95,000	0	95,000	2,25,000
22 lakh	3,50,000	2,50,000	1,00,000	0	1,00,000	2,50,000
23 lakh	3,80,000	2,75,000	1,05,000	0	1,05,000	2,75,000
24 lakh	4,10,000	3,00,000	1,10,000	0	1,10,000	3,00,000
25 lakh	4,40,000	3,30,000	1,10,000	0	1,10,000	3,30,000
50 lakh	11,90,000	10,80,000	1,10,000	0	1,10,000	10,80,000

Resident individuals with an income exceeding Rs. 12 lakh will be eligible for marginal relief.

What is marginal relief?

Marginal relief is a tax benefit provided to individuals whose income slightly exceeds Rs. 12 lakh. Without this relief, such taxpayers would face a significantly higher tax liability due to slab-based taxation. For instance, while an individual earning exactly Rs. 12 lakh pays no tax, someone earning just above this threshold could face a sudden tax burden.

To prevent this sharp jump, marginal relief ensures that the additional tax payable does not exceed the excess income over Rs. 12 lakh. In this case, if the tax liability based on slabs is Rs. 61,500, but the individual's income exceeds Rs. 12 lakh by only a small margin, they would only be required to pay tax equivalent to the excess amount. For example, if their income is Rs. 12,10,000, they would pay Rs. 10,000 in tax, ensuring their take-home income remains fair.

Total Income	Income Tax without Marginal relief in Rs.	Actually payable income Tax with marginal relief
Rs. 12,10,000	61,500	10,000
Rs. 12,50,000	67,500	50,000
Rs. 12,70,000	70,500	70,000
Rs. 12,75,000	71,250	71,250 [ No marginal relief]

How the marginal relief is computed?

The marginal relief is computed in the following manner:

Amount to be charged (out of total income of Rs. 12, 10,000/-)	Tax Amount as per slab rates
Initial amount of 4 lakh	Nil (being basic exemption)
Tax on subsequent amount of 4 lakh (from 4 lakh to 8 lakh)	Rs. 20,000 (being 5% of Rs. 4 lakh)
Tax on subsequent amount of 4 lakh (from 8 lakh to 12 lakh)	Rs. 40,000/- (being 10% of Rs. 4 lakh)
Tax on balance amount of Rs. 10,000/-	Rs. 1500 ((being 15% of Rs. 10,000)
Aggregate tax liability	Rs. 61,500/-

1. Compute Tax as per Slab Rates

The tax liability is first calculated based on the applicable slab rates. For instance, if the total income is Rs. 12,10,000, the following steps apply:

2. Tax on Income up to Rs. 12,00,000

Since income up to Rs. 12 lakh qualifies for a rebate, the tax payable on this portion is Nil.

3. Comparison of Tax Liability

The tax liability without applying marginal relief is Rs. 61,500. This is then compared with the excess income over Rs. 12 lakh, which in this case is Rs. 10,000 (Rs. 12,10,000 - Rs. 12,00,000).

4. Calculating Marginal Relief

Marginal relief is determined by subtracting the excess income (Rs. 10,000) from the initially computed tax liability (Rs. 61,500).

5. Relief Amount

The relief granted under marginal relief is Rs. 51,500 (Rs. 61,500 - Rs. 10,000).

6. Final Tax Payable

After applying marginal relief, the final tax payable is Rs. 10,000 (Rs. 61,500 - Rs. 51,500).

What is an Income tax slab?

In India, individuals are required to pay income tax according to the tax slab their income falls within. These slabs delineate various income ranges, each associated with a specific tax rate, which escalates as income rises. This slab-based approach was devised to establish an equitable tax framework across the country. Adjustments to the income tax slabs are typically made during the budget announcements. Income tax is categorised into three distinct age-based groups

Individuals younger than 60 years,
Senior citizens aged between 60 and 80 years,
Super senior citizens aged over 80 years.

Features of new tax regime: FY 2025-26 (AY 2026-27)

The new tax regime introduces significant changes for taxpayers, offering revised exemption limits and rebates while simplifying the tax structure. Below are its key features:

Default tax regime – The new tax regime remains the default option, but individuals can opt for the old tax regime in any financial year, provided they do not have business income.
Higher basic exemption limit – Currently set at Rs. 3 lakh, the basic exemption limit will be increased to Rs. 4 lakh from April 1, 2025 (FY 2025-26), providing additional tax relief to all individual taxpayers.
Enhanced tax rebate under Section 87A – At present, taxable incomes up to Rs. 7 lakh qualify for a zero-tax rebate. From FY 2025-26, this limit will increase to Rs. 12 lakh, ensuring no tax liability up to that amount.
No change in highest surcharge rate – The highest surcharge rate of 25% on incomes exceeding Rs. 2 crore remains unchanged under Budget 2025, continuing the existing taxation structure for high-income earners.

These updates make the new tax regime more attractive, particularly for middle-income earners, by increasing exemptions and reducing overall tax liability.

How will income up to Rs 12 lakhs be tax free?

Let us consider an example of an individual earning Rs.12 lakh annually under the new tax regime.

For income up to Rs.4 lakh – Zero tax
For income between Rs.4 lakh and Rs.8 lakh – Rs.20,000 tax
For income between Rs.8 lakh and Rs.12 lakh – Rs.40,000 tax
Total tax liability – Rs.60,000

However, under the new tax regime, the enhanced Section 87A rebate eliminates the entire Rs.60,000, making the final tax payable zero for individuals earning up to Rs.12 lakh. In contrast, under the old tax slab, an individual earning Rs.12 lakh had to pay Rs.1,72,500 in taxes.

More Examples:

For individuals earning Rs.15 lakh annually – The new tax regime imposes a Rs.1,40,000 tax, compared to Rs.2,62,500 under the old regime, resulting in a saving of Rs.1,22,500. This provides significant relief for middle-income earners.
For individuals earning Rs.25 lakh annually – The new tax regime requires them to pay Rs.4,40,000, compared to Rs.5,62,500 under the previous system. This leads to a tax saving of Rs.1,22,500, increasing disposable income and encouraging investments.

These revised slabs offer notable tax benefits, making the new tax regime a more attractive option for taxpayers.

Understanding income tax scenarios in the new regime - FY 2025-26 (AY 2026-27)

The new tax regime introduces structured tax slabs, providing clarity on how income tax is calculated based on taxable income. Below are three different scenarios demonstrating tax liability and rebate eligibility.

Scenario 1 – Income Rs.11.5 lakh (Less than Rs.12 lakh)

Since your taxable income is below Rs.12 lakh, you qualify for the full Section 87A rebate.
Total tax payable = Rs.0

Scenario 2 – Income Rs.12.75 lakh (Between Rs.12 lakh - Rs.12.75 lakh)

After availing the Rs.75,000 standard deduction, taxable income reduces to Rs.12 lakh.
This ensures you still qualify for the 100% rebate, leading to zero tax liability.

Scenario 3 – Income Rs.13 lakh (More than Rs.12.75 lakh)

Since income exceeds Rs.12.75 lakh, the rebate is no longer available.
Taxable income after standard deduction = Rs.13 lakh - Rs.75,000 = Rs.12.25 lakh
Tax Calculation:
- Rs.0 - Rs.4 lakh → No tax
- Rs.4 lakh - Rs.8 lakh → 5% on Rs.4 lakh = Rs.20,000
- Rs.8 lakh - Rs.12 lakh → 10% on Rs.4 lakh = Rs.40,000
- Rs.12 lakh - Rs.12.25 lakh → 15% on Rs.25,000 = Rs.3,750
Total tax before marginal relief = Rs.63,750
With marginal relief, applicable tax liability = Rs.25,000 + cess

Key takeaways:

Income up to Rs.12.75 lakh qualifies for zero tax due to rebate.

Income above Rs.12.75 lakh is fully taxable from Rs.4 lakh onwards.

Basic exemption limit is Rs.4 lakh, not Rs.12 lakh.

This applies only under the new tax regime.

Capital gains (STCG & LTCG) are taxed separately.

Applies to resident individuals only.

How much tax will you pay? Salary specific breakdown?

With the revised income tax slab and rates, individuals can benefit from significant tax savings. Below is a breakdown of tax liability at different income levels:

If your taxable income is Rs.13 lakh

15% tax on Rs.12-13 lakh = Rs.15,000
Total tax payable = Rs.75,000
Previous tax liability = Rs.1 lakh → Savings of Rs.25,000

If your taxable income is Rs.15 lakh

15% tax on Rs.12-15 lakh = Rs.45,000
Total tax payable = Rs.1,05,000
Previous tax liability = Rs.1.40 lakh → Savings of Rs.35,000

If your taxable income is Rs.20 lakh

20% tax on Rs.16-20 lakh = Rs.80,000
Total tax payable = Rs.2,00,000
Previous tax liability = Rs.2.90 lakh → Savings of Rs.90,000

If your taxable income is Rs.25 lakh

30% tax on Rs.24-25 lakh = Rs.30,000
Total tax payable = Rs.3,30,000
Previous tax liability = Rs.4.40 lakh → Savings of Rs.1.10 lakh

These revised slabs significantly lower the tax burden, providing greater savings for individuals under the new tax regime.

Does the new tax slab apply to all individuals?

No, the new tax slab applies only to individuals opting for the new tax regime. It is the default regime, but taxpayers can choose the old tax regime if they do not have business income. The revised income tax slab and rates are applicable to resident individuals and Hindu Undivided Families (HUFs) but do not cover businesses, partnerships, or corporate taxpayers. Additionally, capital gains (STCG & LTCG) are taxed separately and do not qualify for slab-based taxation. Individuals must carefully assess their deductions and exemptions before selecting the most beneficial tax regime for their financial planning.

Income tax slab and rates for FY 2024-25 (AY 2025-26) after budget 2024

The new tax regime has been designated as the default option for individual taxpayers in FY 2024-25. While this regime offers simplified tax calculations with fewer deductions, taxpayers still retain the option to choose the old tax regime if it proves more advantageous for their specific financial situation.

Annual Taxable Income Slabs	New Tax Regime Slab Rates FY 24-25 (AY 25-26)	New Tax Regime Slab Rates FY 23-24 (AY 24-25)
Up to Rs. 3,00,000	Nil	Nil
From Rs. 3,00,001 to Rs. 6,00,000	5% on income exceeding Rs. 3,00,000	5% on income exceeding Rs. 3,00,000
From Rs. 6,00,001 to Rs. 7,00,000	5% on income exceeding Rs. 3,00,000	15,000 + 10% on income exceeding Rs. 6,00,000
From Rs. 7,00,001 to Rs. 9,00,000	20,000 + 10% on income exceeding Rs. 7,00,000	25,000 + 10% on income exceeding Rs. 7,00,000
From Rs. 9,00,001 to Rs. 10,00,000	20,000 + 10% on income exceeding Rs. 7,00,000	45,000 + 10% on income exceeding Rs. 9,00,000
From Rs. 10,00,001 to Rs. 12,00,000	50,000 + 15% on income exceeding Rs. 10,00,000	55,000 + 15% on income exceeding Rs. 10,00,000
From Rs. 12,00,001 to Rs. 15,00,000	80,000 + 20% on income exceeding Rs. 12,00,000	90,000 + 20% on income exceeding Rs. 12,00,000
Above Rs. 15,00,000	140,000 + 30% on income exceeding Rs. 15,00,000	150,000 + 30% on income exceeding Rs. 15,00,000

The new tax regime slab rates in FY 2024-25 (AY 2025-26) have been revised, offering tax payers some additional tax relief compared to the rates applicable in the new tax regime in FY 2023-24 (AY 2024-25).

However, it's important to note that these revised rates apply uniformly to all tax payers, regardless of age. This means that the same tax slabs will be used for individuals below 60 years, senior citizens (aged 60 to 80 years), and super senior citizens (aged 80 years and above).

In contrast, the old tax regime offers certain advantages for senior citizens, such as higher exemption limits.

Raising the 30% tax slab threshold

The current threshold for the 30% income tax slab has remained unchanged since 2020, despite inflation eroding its real value. Raising this threshold from Rs 15 lakh to Rs 18 lakh would prevent middle-income earners from being pushed into the highest tax bracket prematurely, thereby creating a more balanced tax system.

Enhancing tax brackets

While calls for raising the tax-free income threshold to Rs 10 lakh are gaining traction, it's crucial to revise tax brackets holistically. A focus solely on increasing the tax-free limit could disproportionately burden higher-income groups. Currently, a small percentage of taxpayers contribute a significant portion of the total income tax collected, highlighting the need for a balanced approach.

Budget 2025 could consider:

Increasing the tax-free income threshold under Section 87A: This rebate, currently at Rs 7 lakh under the new regime, could be raised to Rs 10 lakh.
Widening income slabs: Reducing the steepness of tax rate increases, especially in the old tax regime, could make it more competitive with the new regime.
Increasing standard deduction: Raising it to Rs 75,000 under the old regime and Rs 1,00,000 under the new regime would provide significant relief to salaried individuals.
Harmonizing tax slabs across regimes: Aligning tax slabs and rates between the old and new regimes would create greater consistency.

Reintroducing deductions

The decoupling of deductions from income tax in recent years has led to a decline in long-term savings and investments, including life insurance, ELSS, and small savings schemes. To address this, the Budget could consider a flat deduction of 30% on gross income, capped at Rs 15 lakh, to incentivize investments in long-term wealth-building, insurance, and essential expenses. This would encourage financial discipline while ensuring equity across income levels.

By implementing these reforms, Budget 2025 can create a more equitable and progressive tax system that encourages savings, promotes financial inclusion, and fosters economic growth.

Budget 2025-26 highlights: Key announcements and major changes

Sector	Announcement	Details/Comments
Income Tax	New income tax regime	Income up to Rs 12 lakh: No tax Rs 8-12 lakh: 10% Rs 12-16 lakh: 15% Rs 16-20 lakh: 20% Rs 20-25 lakh: 25% Above Rs 25 lakh: 30%
	TDS on rent	Annual limit raised from Rs 2.4 lakh to Rs 6 lakh
	Tax deduction for senior citizens	Limit doubled to Rs 1 lakh
	Tax for salaried taxpayers	No income tax payable for income up to Rs 12.75 lakh
	Tax on income up to Rs 4 lakh	Set at 0% under the new regime
Start-ups	Benefits continuation	Benefits for start-ups will continue for five years from inception
Banking/Insurance	Grameen credit score framework	To be established for rural India
	FDI in insurance sector	Limit raised to 100%
Housing	Housing fund	Allocation of Rs 15,000 crore for the completion of one lakh housing units
Agriculture	Atmanirbharta in oil seeds	Six-year mission launched
	Cotton yield improvement	Five-year mission initiated
	Kisan Credit Card	Loan limit increased from Rs 3 lakh to Rs 5 lakh
Education	Atal Tinkering Labs	To be established in schools
	Broadband internet	Provision for government secondary schools
	IIT infrastructure	Additional infrastructure to increase student capacity; IIT Patna to be expanded
Healthcare	Daycare cancer centres	To be set up in all district hospitals; 200 centres planned by fiscal 2026
	Duty on life-saving drugs	Six life-saving drugs to have a 5% duty; 36 drugs exempted from basic customs duty
Growth	MSME credit guarantees	Coverage raised from Rs 5 crore to Rs 10 crore
Infrastructure	PPP mode projects	Three-year projects can be implemented in PPP mode
	Interest-free loans	Rs 1.5 lakh crore allocated for states to implement infrastructure reforms
	Regional airports	Over 100 new regional airports planned over the next decade
	UDAN 2.0	To connect 120 new airports, with a focus on Northeast and Bihar
Excise/Customs Duty	Export promotion mission	Set up for easier access to export credit
	Tariff rates	Proposal to remove seven tariff rates, leaving eight remaining
Economy	Investment-friendly index	To promote competition among states
	Fiscal deficit	Revised fiscal deficit target set at 4.8% for fiscal year 2025
	Capital expenditure	Set at Rs 10.18 lakh crore
Women's Development	Term loan for women entrepreneurs	Up to Rs 2 crore available for first-time entrepreneurs from SC/ST and backward classes
Rural India	Nutritional support	For over eight crore children and one crore lactating mothers
Make in India	National Manufacturing Mission	Provides policy support and monitoring framework
	Clean technology manufacturing mission	New initiative launched
	Nuclear Energy Mission	Focused on research and development
Water Management	Jal Jeevan Mission	Extended until 2028
Technology	Centre of Excellence in AI	To be established with an allocation of Rs 500 crore
	EV battery manufacturing	Additional capital goods for production
Tourism	Visa fee waivers	For certain tourist groups

Income tax slabs and rates for financial year 2024-25 under the old tax regime

The income tax slabs under the old regime remained unchanged for the financial year 2024-25 (Assessment Year 2025-26). Here's a summary:

Individuals below 60 years, HUFs, BOIs, and AoPs:
- Up to Rs. 2.5 lakh: Nil
- Rs. 2.5 lakh to Rs. 5 lakh: Up to 5% tax
- Rs. 5 lakh to Rs. 10 lakh: 20% tax
- Above Rs. 10 lakh: 30% tax
Senior Citizens (60-80 years):
- Up to Rs. 3 lakh: Nil
- Rs. 3 lakh to Rs. 5 lakh: Up to 5% tax
- Rs. 5 lakh to Rs. 10 lakh: 20% tax
- Above Rs. 10 lakh: 30% tax
Super Senior Citizens (80+ years):
- Up to Rs. 5 lakh: Nil
- Rs. 5 lakh to Rs. 10 lakh: 20% tax
- Above Rs. 10 lakh: 30% tax

You can use an income tax calculator to determine your tax liability for the financial year 2024-25. If you need assistance, you can consult a tax professional.

Income tax slabs under the old tax regime for individual, HUF, AOP, and BOI

Tax slabs for FY 2024-25 under the old regime apply to both individuals and non-individual entities like HUFs, AoPs, and BOIs.

Annual Taxable Income Slabs	Income Tax Slab Rates
For tax payer aged less than 60 years
Up to Rs. 2,50,000	Nil
Between Rs. 2,50,001 to Rs. 5,00,000	5% on taxable income exceeding Rs. 2,50,000
Between Rs. 5,00,001 to Rs. 10,00,000	Rs. 12,500 + 20% on taxable income exceeding Rs. 5,00,000
Above Rs. 10,00,000	Rs. 1,12,500 + 30% on taxable income exceeding Rs. 10,00,000
For senior citizen tax payers aged between 60 to 80 years
Up to Rs. 3,00,000	Nil
From Rs. 3,00,001 to Rs. 5,00,000	5%
From Rs. 5,00,001 to Rs. 10,00,000	Rs. 10,000 + 20% on income exceeding Rs. 5,00,000
Above Rs. 10,00,000	Rs. 1,10,000 + 30% on income exceeding Rs. 10,00,000
For super senior citizen individual tax payers aged over 80 years
Up to Rs. 5,00,000	Nil
From Rs. 5,00,001 to Rs. 10,00,000	20% on income exceeding Rs. 500,000
Above Rs. 10,00,000	Rs. 1,00,000 + 30% of total income exceeding Rs. 10,00,000

Old tax regime vs new tax regime: FY 2024-25 (AY 2025-26) vs. FY 2023-24 (AY 2024-25)

Starting FY 2024-25, the new tax regime has become the default option for individual taxpayers. While the new regime offers limited deductions compared to the old regime, eligible taxpayers still have the flexibility to opt for the old tax regime if it better suits their financial situation.

A comparison of the new tax regime slab rates for FY 2024-25 (AY 2025-26) against those for FY 2023-24 (AY 2024-25) reveals that the new regime provides additional tax relief, making it a more appealing option for many taxpayers. Below is a detailed comparison of the income tax slab rates under the new tax regime for FY 2024-25 versus FY 2023-24.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 2,50,000	Nil	Nil	Up to Rs. 3,00,000	Nil	Nil
Rs. 2,50,001 - Rs. 5,00,000**	5% above Rs. 2,50,000	Nil	Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 12,500 + 20% above Rs. 5,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 200,00,001- Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Rs. 50,00,001- Rs. 100,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Above Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 100,00,001- Rs. 200,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
			Above Rs. 200,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

The Interim Budget 2024-25 initially retained the same income tax slabs and rates for the Assessment Year 2025-26 as the previous year. However, the full Budget 2024 introduced changes, making the new tax regime the default option for individuals, HUFs, and other entities. While taxpayers have the option to choose the old regime with its deductions and exemptions, the new regime offers revised tax slabs and rates. For those with income from business or profession, the option to switch between regimes is available only once.

Old tax regime slabs and rates for individual taxpayers below 60 years (AY 2025-26, FY 2024-25)

Under the old tax regime, individual taxpayers below 60 years enjoy a progressive tax structure. The first Rs. 2,50,000 of income is tax-free. Income between Rs. 2,50,001 and Rs. 5,00,000 is taxed at 5%, while income between Rs. 5,00,001 and Rs. 10,00,000 is taxed at 20% plus a flat rate of Rs. 12,500. Income exceeding Rs. 10,00,000 is taxed at 30% plus a flat rate of Rs. 1,12,500. A surcharge is applicable on higher incomes, ranging from 10% for income between Rs. 50,00,001 and Rs. 1,00,00,000 to 37% for income exceeding Rs. 5,00,00,000.

income tax slabs and rates under the old tax regime for individuals (both residents and non-residents) who were less than 60 years of age at any point during the previous year are as follows:

Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 2,50,000	Nil	Nil
Rs. 2,50,001 - Rs. 5,00,000**	5% above Rs. 2,50,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 12,500 + 20% above Rs. 5,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%
Rs. 200,00,001- Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%
Above Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%

Old tax regime slabs and rates for senior citizens aged 60 to 80 years (AY 2025-26, FY 2024-25)

The old tax regime offers some benefits for senior citizens. The basic exemption limit is increased to Rs. 3,00,000. Subsequently, income between Rs. 3,00,001 and Rs. 5,00,000 is taxed at 5%, and income between Rs. 5,00,001 and Rs. 10,00,000 is taxed at 20% with a flat rate of Rs. 10,000. Income exceeding Rs. 10,00,000 is taxed at 30% with a flat rate of Rs. 1,12,500. A surcharge is applicable on higher incomes, with rates ranging from 10% for income between Rs. 50,00,001 and Rs. 1,00,00,000 to 37% for income exceeding Rs. 5,00,00,000. This structure provides slightly higher tax thresholds for senior citizens compared to those below 60 years.

See the below table to explore more" to move forward to the table.

Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 3,00,000	Nil	Nil
Rs. 3,00,001 - Rs. 5,00,000**	5% above Rs. 3,00,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 10,000 + 20% above Rs. 5,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%
Rs. 200,00,001- Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%
Above Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%

Old tax regime slabs and rates for super senior citizens aged over 80 years (AY 2025-26, FY 2024-25)

For super senior citizens (aged 80 years and above), the old tax regime provides a higher tax exemption limit of Rs. 5,00,000. Income exceeding Rs. 5,00,000 is taxed at 20% up to Rs. 10,00,000 and 30% thereafter, with a flat rate of Rs. 10,000 and Rs. 1,12,500 applicable respectively. A surcharge ranging from 10% to 37% is levied on incomes exceeding Rs. 50,00,000, with the highest rate applicable for incomes exceeding Rs. 5 crores.

See the below table to explore more.

Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 5,00,000	Nil	Nil
Rs. 5,00,001 - Rs. 10,00,000	20% above Rs. 5,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%
Rs. 200,00,001- Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%
Above Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%

Individual taxpayers aged less than 60 years old: New tax slabs for AY 2025-26

The table showcases the income tax slabs and rates for different income levels in India. Individuals earning up to Rs. 3,00,000 are exempt from income tax. For income between Rs. 3,00,001 and Rs. 7,00,000, a 5% tax rate applies. As income increases, the tax rate also increases, reaching 30% for income exceeding Rs. 15,00,000. Surcharges are applicable on higher income levels, starting at 10% for income exceeding Rs. 50,00,000 and increasing to 25% for income exceeding Rs. 2,00,00,000.

Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 3,00,000	Nil	Nil
Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Rs. 100,00,001- Rs. 2,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
Above Rs. 2,00,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Old vs new income tax slabs and tax rates for individual taxpayers aged less than 60 years old

The income tax regime for individual taxpayers aged below 60 years offers two options: the old regime with deductions and exemptions, and the new regime with lower tax rates but no exemptions. To help you make an informed decision, the table below compares the tax slabs and rates under both regimes, highlighting their key differences.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 2,50,000	Nil	Nil	Up to Rs. 3,00,000	Nil	Nil
Rs. 2,50,001 - Rs. 5,00,000**	5% above Rs. 2,50,000	Nil	Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 12,500 + 20% above Rs. 5,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 2,00,00,001- Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Rs. 50,00,001- Rs. 100,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Above Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 1,00,00,001- Rs. 200,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
			Above Rs. 2,00,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Senior citizen taxpayers aged between 60 to 80 years: New tax slabs for AY 2025-26

The table illustrates the income tax slabs and corresponding tax rates for different income levels in India. Individuals earning up to Rs. 3,00,000 are exempt from income tax. For income between Rs. 3,00,001 and Rs. 7,00,000, a 5% tax rate is applicable. As income increases, the tax rate also increases, reaching 30% for income exceeding Rs. 15,00,000. Surcharges are applicable on higher income levels, starting at 10% for income exceeding Rs. 50,00,000 and increasing to 25% for income exceeding Rs. 2,00,00,000.

Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 3,00,000	Nil	Nil
Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
Above Rs. 2,00,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Old vs new income tax slabs and tax rates for senior citizen taxpayers aged between 60 to 80 years

To make informed financial decisions, it's essential for senior citizens (aged 60 to 80 years) to understand the differences between the old and new income tax slabs. The Indian government has introduced new tax regimes to simplify tax calculations, and it's crucial to assess how these changes impact your tax liability. This section provides a comparative analysis of the old and new income tax slabs and rates, enabling you to determine which regime offers the most advantageous tax outcome.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 3,00,000	Nil	Nil	Up to Rs. 3,00,000	Nil	Nil
Rs. 3,00,001 - Rs. 5,00,000**	5% above Rs. 3,00,000	Nil	Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 10,000 + 20% above Rs. 5,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 2,00,00,001- Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Rs. 50,00,001- Rs. 100,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Above Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 1,00,00,001- Rs. 200,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
			Above Rs. 2,00,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Super senior citizen taxpayers aged over 80 years: New tax slabs for AY 2025-26

The table outlines the income tax slabs and corresponding tax rates for different income levels in India for individuals above 80 years of age. Individuals earning up to Rs. 3,00,000 are exempt from income tax. For income between Rs. 3,00,001 and Rs. 7,00,000, a 5% tax rate is applicable. As income increases, the tax rate also increases, reaching 30% for income exceeding Rs. 15,00,000. Surcharges are applicable on higher income levels, starting at 10% for income exceeding Rs. 50,00,000 and increasing to 25% for income exceeding Rs. 2,00,00,000.

Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 3,00,000	Nil	Nil
Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Above Rs. 15,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
Above Rs. 200,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Old vs new income tax slabs and tax rates for super senior citizen individual taxpayers aged over 80 years

The Indian tax system provides specific benefits to super senior citizens (aged 80+). This section compares the old and new income tax slabs and rates for this demographic, enabling you to understand the differences and make informed decisions about which tax regime offers the most advantageous tax outcome.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 5,00,000	Nil	Nil	Up to Rs. 3,00,000	Nil	Nil
Rs. 5,00,001 - Rs. 10,00,000	20% above Rs. 5,00,000	Nil	Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 200,00,001- Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Above Rs. 15,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Above Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
			Rs. 50,00,001- Rs. 100,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
			Rs. 100,00,001- Rs. 200,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
			Above Rs. 200,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Understanding the revised New Tax Regime: What’s changed?

The Union Budget 2024 has introduced significant updates to the income tax regime, aimed at simplifying the tax structure and providing relief to taxpayers. The revised income tax slabs bring expanded thresholds for certain categories, ensuring more taxpayers benefit from lower rates. These changes not only reflect the government's commitment to boosting disposable income but also encourage individuals to adopt the new tax regime. The following table depicts the changes made in the new regime to benefit the taxpayers:

Income Tax Slabs for FY 2023-24	Tax Rates (FY 2023-24)	Income Tax Slabs for FY 2024-25	Tax Rates (FY 2024-25)	Changes
Up to Rs. 3,00,000	NIL	Up to Rs. 3,00,000	NIL	No Change
Rs. 3,00,000 – Rs. 6,00,000	5%	Rs. 3,00,000 – Rs. 7,00,000	5%	Slab expanded by Rs 1,00,000
Rs. 6,00,000 - Rs 9,00,000	10%	Rs. 7,00,000 – Rs. 10,00,000	10%	Slab expanded by Rs 1,00,000
Rs. 9,00,000 - Rs 12,00,000	15%	Rs. 10,00,000 – Rs. 12,00,000	15%	No Change in Rate; New Threshold
Rs. 12,00,000 - Rs 15,00,000	20%	Rs. 12,00,000 – Rs. 15,00,000	20%	No Change
Above Rs. 15,00,000	30%	Above Rs. 15,00,000	30%	No Change

Increased Standard Deduction for FY 2024-25 (AY 2025-26)

The Budget 2024 brought welcome news for salaried individuals with an increase in the standard deduction to Rs. 75,000 for AY 2025-26, up from Rs. 50,000 in AY 2024-25.

Since the standard deduction is available to all salaried taxpayers regardless of their income level, this additional Rs. 25,000 could translate to tax savings of Rs. 7,500 (excluding cess) for those in the highest 30% tax bracket. Notably, this benefit does not require any tax-saving investments. However, self-employed individuals, self-employed professionals, and non-individual taxpayers such as Hindu Undivided Families (HUFs) are not eligible for this deduction.

Other Notable Points for Income Tax Slabs and Rates for AY 2025-26 (FY 24-25)

1. Surcharge and Cess: The income tax rates outlined above do not include the surcharge and health and education cess. A 4% health and education cess is applicable on the total tax payable. For incomes exceeding Rs. 50 lakh in FY 2024-25, the surcharge applies as follows:

Annual Taxable Income	Surcharge on Income Tax (Old Tax Regime)	Surcharge on Income Tax (New Tax Regime)
Up to Rs. 50 Lakh	Nil	Nil
Over Rs. 50 Lakh and up to Rs. 1 Crore	10%	10%
Over Rs. 1 Crore and up to Rs. 2 Crore	15%	15%
Over Rs. 2 Crore and up to Rs. 5 Crore	25%	25%
Over Rs. 5 Crore	37%	25%

As evident, the maximum surcharge under the new tax regime is capped at 25%, whereas, the maximum surcharge payable under the old tax regime for AY 2025-26 is 37%.

2. Gender Neutrality: The income tax slabs and rates are identical for both male and female taxpayers.

3. Tax Rebate:

Old Tax Regime: If your taxable income falls below Rs. 5 lakh in FY 2024-25, you are eligible for a tax rebate of up to Rs. 12,500 under Section 87A.
New Tax Regime: If your annual taxable income is up to Rs. 7 lakh, you are eligible for a similar 100% tax rebate under Section 87A.

15 key Income Tax rule changes in 2024 that will influence ITR filing in 2025

The Union Budget 2024 brought several changes to income tax rules that will significantly impact taxpayeRs. As you prepare to file your Income Tax Returns (ITR) for FY 2024-25, understanding these changes is crucial to optimize your tax liability. Here’s an overview of the key updates, along with their potential implications.

1. New Income Tax Slabs Under the New Tax Regime

The government has revamped the income tax slabs under the new tax regime, enabling taxpayers to save up to Rs. 17,500 annually.

New Slabs for FY 2024-25:
- Up to Rs. 3,00,000: Nil
- Rs. 3,00,001 to Rs. 6,00,000: 5%
- Rs. 6,00,001 to Rs. 9,00,000: 10%
- Rs. 9,00,001 to Rs. 12,00,000: 15%
- Rs. 12,00,001 to Rs. 15,00,000: 20%
- Above Rs. 15,00,000: 30%

2. Standard Deduction Limit Increased

For those opting for the new tax regime, the standard deduction has been increased:

Salaried individuals: From Rs. 50,000 to Rs. 75,000.
Family pensioners: From Rs. 15,000 to Rs. 25,000.

3. Higher Deduction on Employer's NPS Contribution

The employer's contribution to the National Pension System (NPS) now allows deductions of up to 14% of the basic salary under the new tax regime, compared to 10% previously.

4. Revised Tax Rates for LTCG and STCG

Changes in capital gains taxation include:

Short-term capital gains (STCG) on equity: Increased from 15% to 20%.
Long-term capital gains (LTCG) on equity-oriented mutual funds: Exempt up to Rs. 1.25 lakh, raised from Rs. 1 lakh.
LTCG from other assets (e.g., real estate, gold): Taxed uniformly at 12.5%, with an option for indexation benefits for houses purchased before July 22, 2024.

5. New Holding Period Rules for Capital Gains

The categorization of capital gains as long-term or short-term now depends on simplified holding periods:

Listed securities: 12 months for long-term gains.
Unlisted securities: 24 months for long-term gains.

6. Rationalization of TDS Rates

The government has standardized TDS rates for several incomes. Key changes include:

Insurance commissions (non-company): 2%.
Payment of rent by HUFs/individuals: 2%.
E-commerce transactions: 0.1%.
These changes ensure simpler compliance and more consistency.

7. Claiming TDS/TCS Credits on Salaries

Taxpayers can now claim TDS and TCS credits on other incomes against salary income to reduce the tax deduction amount. This change offers salaried individuals better cash flow management.

8. TCS Credit Transfer

From January 1, 2025, parents or guardians can claim Tax Collected at Source (TCS) credits for payments made on behalf of their children, such as tuition fees for foreign education.

9. Taxation of Share Buybacks

The amended law now taxes proceeds from share buybacks in the hands of shareholders at their applicable income tax slab rate. Previously, companies paid Dividend Distribution Tax (DDT) on buybacks at 20%.

10. TCS on Notified Luxury Goods

Luxury goods purchases exceeding Rs. 10 lakh will attract TCS from January 2025. The specific list of luxury items and implementation details are awaited.

11. Updated TDS Rules for Property Sales

Buyers must deduct TDS from the total payment made to sellers if the property's sale value exceeds Rs. 50 lakh, even if the seller’s share is less than Rs. 50 lakh. This rule closes a potential loophole in property transactions.

12. TDS on RBI Floating Rate Bonds

Interest earned on RBI Floating Rate Bonds will now attract TDS if it exceeds Rs. 10,000 per month. This amendment ensures tax compliance for high-value interest income.

13. Vivad Se Vishwas Scheme 2.0

The revamped scheme facilitates resolution of pending tax litigations. Taxpayers can settle disputes with the Income Tax Department under this initiative, applicable from October 2024.

14. Aadhaar Enrollment Number Discontinued

From October 2024, quoting Aadhaar enrollment numbers in ITR or PAN applications will no longer be accepted. Taxpayers must have a valid Aadhaar number for these purposes.

15. Reduced Time Limit for Reopening Old ITRs

The Income Tax Department has reduced the time frame for reopening old ITRs from 10 years to 5 years if the income escaping assessment exceeds Rs. 50 lakh. This change reduces tax-related uncertainties for individuals.

Here's how income tax slab rates have changed for FY 2024-25

The Income Tax Slab Rates for the Financial Year 2024-25 have been updated, introducing modifications aimed at providing relief to taxpayers. These changes encompass adjustments to tax brackets and rates, potentially impacting various income groups. Explore the key updates to better understand your tax liabilities.

Income tax slabs for Hindu Undivided Family (HUF) for AY 2025-2026

The income tax rates for resident individuals and Hindu Undivided Families (HUFs) for the current fiscal year have been announced, featuring adjustments to provide tax relief and streamline fiscal responsibilities. These changes are designed to benefit a broad range of taxpayers.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate
Up to Rs. 2,50,000	Nil	Nil	Up to Rs. 3,00,000	Nil
Rs. 2,50,001 - Rs. 5,00,000**	5% above Rs. 2,50,000	Nil	Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000
Rs. 5,00,001 - Rs. 10,00,000	Rs. 12,500 + 20% above Rs. 5,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000
Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000
Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000
Rs. 2,00,00,001- Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Rs. 50,00,001- Rs. 1.00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000
Above Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000
			Above Rs. 2,00,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000

Income tax slabs for Non-Resident Individual (AY 2025-26)

The latest income tax rates for non-resident individuals have been released, reflecting adjustments tailored to align with global taxation standards. These changes are crucial for non-residents to understand in order to comply with Indian tax regulations and optimize their fiscal planning.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 2,50,000	Nil	Nil	Up to Rs. 3,00,000	Nil	Nil
Rs. 2,50,001 - Rs. 5,00,000	5% above Rs. 2,50,000	Nil	Rs. 3,00,001 - Rs. 7,00,000	5% above Rs. 3,00,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 12,500 + 20% above Rs. 5,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 2,00,00,001- Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Rs. 50,00,001- Rs. 1,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Above Rs. 5,00,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 1,00,00,001- Rs. 2,00,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
			Above Rs. 2,00,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Association of Persons (AOP) / Body of Individuals (BOI) / Trust / Artificial Juridical Person (AJP) for AY 2025-26

The following tax rates apply to Associations of Persons (AOPs), Bodies of Individuals (BOIs), and Artificial Juridical Persons (AJPs) under both the old and new tax regimes.

Important Notes:

Trusts: Trusts that are not exempt from taxation as per relevant provisions and require approvals or registrations under the Income Tax Act are considered AOPs for tax purposes.
Default tax regime: The Finance Act 2023 has made the new tax regime the default for individuals, HUFs, AOPs (excluding co-operative societies), BOIs, and AJPs starting from Assessment Year 2024-25. However, these entities have the option to choose the old tax regime.
Switching regimes:
- For non-business income, entities can switch between the new and old regimes annually by indicating their choice in the income tax return (ITR) filed by the due date.
- For entities with income from business or profession, the option to switch between regimes is generally limited to a one-time decision. They need to file Form 10-IEA to opt for the old regime.
Co-operative societies: Co-operative societies can opt for the new tax regime from Assessment Year 2024-25 by filing Form 10-IFA.
Concessional tax for new manufacturing co-operatives: New manufacturing co-operative societies registered on or after April 1, 2023, and commencing manufacturing or production before March 31, 2024, can opt for a concessional tax rate of 15% under Section 115BAE. However, this option cannot be withdrawn once exercised.

Old Tax Regime			New Tax Regime u/s 115BAC
Income Tax Slab	Income Tax Rate	*Surcharge	Income Tax Slab	Income Tax Rate	*Surcharge
Up to Rs. 2,50,000	Nil	Nil	Up to Rs. 3,00,000	Nil	Nil
Rs. 2,50,001 - Rs. 5,00,000**	5% above Rs. 2,50,000	Nil	Rs. 3,00,001 - Rs. 7,00,000**	5% above Rs. 3,00,000	Nil
Rs. 5,00,001 - Rs. 10,00,000	Rs. 12,500 + 20% above Rs. 5,00,000	Nil	Rs. 7,00,001 - Rs. 10,00,000	Rs. 20,000 + 10% above Rs. 7,00,000	Nil
Rs. 10,00,001- Rs. 50,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	Nil	Rs. 10,00,001 - Rs. 12,00,000	Rs. 50,000 + 15% above Rs. 10,00,000	Nil
Rs. 50,00,001- Rs. 100,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	10%	Rs. 12,00,001 - Rs. 15,00,000	Rs. 80,000 + 20% above Rs. 12,00,000	Nil
Rs. 100,00,001- Rs. 200,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	15%	Rs. 15,00,001- Rs. 50,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	Nil
Rs. 200,00,001- Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	25%	Rs. 50,00,001- Rs. 100,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	10%
Above Rs. 500,00,000	Rs. 1,12,500 + 30% above Rs. 10,00,000	37%	Rs. 100,00,001- Rs. 200,00,000	Rs. 1,40,000 + 30% above Rs. 15,00,000	15%
			Above Rs. Rs. 200,00,001	Rs. 1,40,000 + 30% above Rs. 15,00,000	25%

Note: The income tax slabs for the financial year 2024-25 under the old tax regime remain unchanged from the previous year. Individuals below 60 years, HUFs, BOIs, and AoPs have zero tax liability on income up to ₹2.5 lakhs. Senior citizens (60-80 years) enjoy nil tax liability up to ₹3 lakhs, while super senior citizens (above 80 years) are exempt from tax on income up to ₹5 lakhs. Income between ₹2.5 lakhs and ₹5 lakhs for individuals and corresponding brackets for senior citizens is taxed at up to 5%, depending on their age group. Income between ₹5 lakhs and ₹10 lakhs is taxed at 20%, and income exceeding ₹10 lakhs is taxed at 30%. Determining your tax liability is straightforward using an income tax calculator or by seeking assistance from a tax professional.

***Note: Health & Education cess @ 4% to be paid on the amount of income tax plus Surcharge (if any) in both the regimes.

Tax slabs for domestic company for AY 2025-26

The updated income tax rates for domestic companies have been set, reflecting efforts to support business growth and economic stability within India. These rates are critical for companies to understand as they plan their financial strategies and fulfill their tax obligations effectively.

Condition	Income Tax Rate (excluding surcharge and cess)
Total Turnover or Gross Receipts during the previous year 2020-21 does not exceed Rs. 400 crores	25%
If opted for Section 115BA	25%
If opted for Section 115BAA	22%
If opted for Section 115BAB	15%
Any other Domestic Company	30%

Surcharge, marginal relief, and health & education cess

What is surcharge?

Surcharge is an additional tax levied on individuals earning above certain income thresholds. It is calculated as a percentage of the income tax determined based on applicable tax rates.

7% on taxable income above Rs. 1 crore and up to Rs. 10 crore
12% on taxable income above Rs. 10 crore
10% for companies opting for taxability under Section 115BAA or Section 115BAB

What is Marginal Relief?

Marginal Relief is a mechanism that limits the surcharge payable. If the surcharge amount exceeds the additional income earned that triggers the surcharge liability, the surcharge payable is capped at the amount of that additional income.

For income exceeding Rs. 1 crore: Surcharge cannot exceed the amount of income earned above Rs. 1 crore.
For income exceeding Rs. 10 crore: Surcharge cannot exceed the amount of income earned above Rs. 10 crore.

What is Health and Education Cess?

Health and Education Cess is a 4% cess levied on the total income tax amount, including any applicable surcharge.

Notes:

Minimum Alternate Tax (MAT): Companies are liable to pay MAT at 15% of their book profit (plus surcharge and Health & Education Cess) if their normal tax liability is less than 15% of their book profit.
MAT for International Financial Services Centre (IFSC) Units: IFSC units deriving income solely in convertible foreign exchange are liable to pay MAT at 9% (plus cess and surcharge).
Companies opting for special rate taxation under Sections 115BAA and 115BAB are exempt from MAT.
Companies opting for special rate taxation under Sections 115BAA or 115BAB are not allowed certain deductions, except for deductions under Sections 80JJAA and 80M.

Income tax rate for partnership firm or LLP as per old/new regime

For Partnership Firm and LLP, the income tax rate is 30% on net profit. Surcharge is levied at 12.5% if income exceeds Rs. 1 crore. Additionally, a 4% Health & Education Cess is applicable. Minimum Alternate Tax (MAT) is 18.5% of adjusted total income.

Income tax rate for foreign company under new income tax regime

Foreign companies operating in India are subject to specific income tax rates, which are generally structured to align with international standards and foster a favorable investment climate. These rates are crucial for multinational corporations to understand, as they impact financial planning and compliance with Indian tax regulations.

Nature of Income	Tax Rate
Royalty received from the Government or an Indian concern according to an agreement post-March 31, 1961, but before April 1, 1976; or fees for technical services from an agreement post-February 29, 1964, but before April 1, 1976, approved by the Central Government	50%
Any other income	40%

Additional Notes:

Surcharge: Imposed based on total income levels:
Rs. 1 Crore to 10 Crores: 2%
Above Rs. 10 Crore: 5%
Health & Education Cess: 4% on the total tax.
MAT (Minimum Alternate Tax): Applicable as per section 115JB.

For individuals, Hindu Undivided Families (HUF), and Non-Resident Indians (NRIs) below the age of 60, the income tax exemption limit is set at a maximum of Rs 2,50,000. This means that any income earned within this threshold will not be subject to income tax.

However, it is essential to note that surcharge and cess will still be applicable on the tax amount. These additional charges are discussed separately.

Furthermore, an additional 4% Health & Education Cess will be levied on the total tax and surcharge amount. This cess is a further contribution towards the country's healthcare and education initiatives.

Income Slabs	Individuals of Age < 60 Years and NRIs
Up to Rs 2,50,000	NIL
Rs 2,50,001 - Rs 5,00,000	5%
Rs 5,00,001 to Rs 10,00,000	20%
Rs 10,00,001 and above	30%

Conditions for Opting for the New Tax Regime

Taxpayers choosing the new regime will forego certain deductions and exemptions available under the old regime.

Common Deductions & Exemptions Not Allowed:

Leave Travel Allowance (LTA)
Conveyance AllowanceHouse Rent Allowance (HRA)
Relocation Allowance
Children Education Allowance
Professional TaxDaily Expenses in the Course of Employment
Helper Allowance
Deductions under Chapter VI-A (e.g., 80C, 80D, 80E), except for Section 80CCD(2)
Standard Deduction on Salary
Interest on Housing Loan (Section 24)
Other Special Allowances (Section 10(14))

What are the Exemptions/Deductions unavailable under the new tax regime in FY 24-25?

The 2020 budget significantly revised the tax structure by removing approximately 70 of the 100 exemptions previously available under the new tax regime. Opting for the new income tax brackets 24-25 for tax calculation means foregoing several critical exemptions and deductions, including:

House Rent Allowance (HRA): Previously deductible under Section 10 (13A), this allowance helped employees reduce taxable income by the amount paid for rented accommodation.
Leave Travel Allowance (LTA): Section 10(5) provided a deduction for expenses on travel while on leave, which is no longer available under the new regime.
Specific Allowances: Allowances exempt under Section 10(14), including conveyance and children's education allowance, are not deductible in the new tax regime.
Tax-Free Perquisites: Benefits such as food coupons and other tax-free allowances that were exempt from tax will now be included in taxable income.
Chapter VI A Deductions: Significant deductions like those under Section 80C (investments), 80D (medical insurance), 80TTA (savings interest), etc., are not available.
Home Loan Interest Deduction: The deduction for interest paid on home loans for self-occupied property under Sections 24(b) and Section 80EEA will no longer reduce taxable income in the new regime.

What Exemptions/Deductions are Available under the New Tax Regime in FY 24-25?

Under the new income tax brackets 24-25, taxpayers can still avail of certain deductions and exemptions, despite the removal of many previously available ones. These include:

NPS Contributions by Employer: Contributions to the National Pension System (NPS) by an employer, up to 10% of the salary of the employee (and 14% for Central Government employees), are deductible under Section 80CCD(2).
Standard Deduction on Rental Income: For rented-out property, a standard deduction of 30% of the net rental income is allowed, simplifying the calculation of taxable income from house property.
Home Loan Interest: Interest paid on a home loan for a let-out property can be deducted from the rental income earned, although a loss from house property cannot be offset against other income heads.
Transport Allowance for Divyang Employees: Divyang (disabled) employees are eligible for a transport allowance exemption to cover daily travel expenses between their workplace and home.
Conveyance Allowance: Expenses incurred on conveyance for official duties are permissible as a conveyance allowance.
Allowances for Travel and Transfer: Allowances provided to employees for the costs associated with travel on tour or transfer are exempt.
Daily Allowance: A daily allowance received to cover ordinary day-to-day expenses while away from the normal place of duty is also allowed.

Deductions: Old Tax Regime vs. New Tax Regime (Section 115BAC) for FY 2024-25

This table outlines the key differences in available deductions between the Old Tax Regime and the New Tax Regime (Section 115BAC) for the financial year 2024-25.

Deduction/Exemption	Old Regime	New Regime (Section 115BAC)
Section 80C (Investment in PPF, NSC, Life Insurance Premium, ELSS, etc.)	Available up to Rs. 1.5 lakh	Not available
Section 80D (Health insurance premium)	Available	Not available
Standard Deduction (for salaried individuals)	Rs. 50,000	Rs. 75,000 (FY 2024-25) and Rs. 50,000 (FY 2023-24)
House Rent Allowance (HRA)	Available (based on actuals)	Not available
Leave Travel Allowance (LTA)	Available	Not available
Interest on Housing Loan (Section 24) (for self-occupied property)	Deduction up to Rs. 2 lakh	Not available
Section 80E (Interest on education loan)	Available	Not available
Section 80G (Donations to charitable institutions)	Available	Not available

Benefits and drawbacks of New Tax Regime

Choosing between India's new and old tax regimes involves weighing their respective advantages and disadvantages against your financial habits, income level, and investment strategy. Here's a breakdown to help guide your decision:

Benefits of the New Tax Regime:

Simplified Tax Process: With fewer deductions and exemptions, the new regime streamlines tax filing, benefiting those overwhelmed by the complexity of the old regime.
Reduced Tax Rates: For individuals earning up to Rs. 7 lakhs, the new regime often provides lower tax rates, potentially increasing your net income.
Tax Rebate Advantage: Earnings up to Rs. 7 lakhs qualify for a full tax rebate, resulting in zero tax liability under the new regime.
Enhanced Liquidity: The absence of compulsory tax-saving investments increases available cash for other financial purposes.

Drawbacks of the New Tax Regime:

Loss of Deductions and Exemptions: Opting for the new regime means missing out on several key deductions and exemptions (e.g., HRA, LTA), which could raise your taxable income.
Reduced Financial Planning Flexibility: The elimination of deductions limits opportunities to strategically lower your tax obligations through targeted investments and expenditures.
Potentially Higher Taxes for Higher Earners: Individuals with incomes over Rs. 10 lakhs might find themselves subject to higher taxes under the new regime, especially when including surcharges on incomes above Rs. 5 crores.
Disadvantages for Long-Term Savers: The new regime may not suit those who depend on tax-saving investments for wealth accumulation, as it excludes these benefits.

Additional Considerations:

Regime Switching Flexibility: Taxpayers have the annual option to choose between regimes at tax filing, offering a chance to adjust as financial circumstances change.
Careful Comparison is Key: Evaluating your tax obligations under both regimes can clarify which option minimises your tax liability, with tools like online tax calculators providing assistance.
Plan According to Future Financial Goals: Consider potential income growth and investment objectives in your regime choice.
Seek Professional Advice: A tax advisor can offer tailored recommendations, ensuring your tax strategy aligns with your overall financial landscape.

How to Calculate Income Tax for Income Tax Slabs for FY 24-25 (AY 2025-26)

To illustrate the process of income tax calculation, let's take the example of Anjali, a salaried individual with an annual income of Rs. 9,00,000. Anjali is eligible for deductions under Section 80C amounting to Rs. 2,00,000. The calculation of her income tax involves a few key steps:

1. Calculating Gross Taxable Income

Anjali's gross taxable income is determined by subtracting the eligible deductions from her total income. This calculation is as follows:

Total annual income: Rs. 9,00,000Less
deductions under Section 80C: Rs. 2,00,000
Gross taxable income: Rs. 9,00,000 - Rs. 2,00,000 = Rs. 7,00,000

With a gross taxable income of Rs. 7,00,000, the next step is to apply the appropriate tax slabs.

2. Understanding the Applicable Tax Slabs

The income tax rates for the financial year 2023-24 are structured as follows:

Up to Rs. 2,50,000: 0% (no tax)
Rs. 2,50,001 to Rs. 5,00,000: 5%
Rs. 5,00,001 to Rs. 10,00,000: 20%
Above Rs. 10,00,000: 30%

Anjali's gross taxable income of Rs. 7,00,000 falls within the Rs. 5,00,001 to Rs. 10,00,000 range, meaning the applicable tax rate is 20% for the amount exceeding Rs. 5,00,000.

3. Calculating the Income Tax

To calculate Anjali's income tax liability:

The first Rs. 2,50,000 of her income is tax-free.
The next Rs. 2,50,000 (from Rs. 2,50,001 to Rs. 5,00,000) is taxed at 5%, resulting in a tax of Rs. 12,500 (5% of Rs. 2,50,000).
The remaining Rs. 2,00,000 (from Rs. 5,00,001 to Rs. 7,00,000) is taxed at 20%, amounting to Rs. 40,000 (20% of Rs. 2,00,000).

The total tax liability is thus Rs. 12,500 + Rs. 40,000 = Rs. 52,500.

4. Consideration of Surcharge and Rebate

Since Anjali's income does not exceed Rs. 50 lakhs, no surcharge applies. Additionally, she is not eligible for the Section 87A rebate, as her taxable income is above Rs. 5,00,000.

Therefore, for the financial year 2023-24, Anjali’s total income tax liability amounts to Rs. 52,500.

How to calculate income tax liability under old tax regime?

Calculating income tax liability under the old tax regime involves understanding the income tax slabs, deductions, and exemptions applicable for the financial year. The old tax regime allows taxpayers to claim various deductions, such as those under Section 80C, HRA, and standard deductions, which help reduce the taxable income. Here’s a step-by-step guide on calculating income tax liability under the old tax regime.

1. Determine Gross Total Income

Gross total income is the sum of all income sources, including salary, house property, capital gains, business or profession, and other sources like interest income. This forms the basis for further calculations.

2. Apply Deductions and Exemptions

Deductions such as Section 80C (investments in ELSS, PPF, etc.), Section 80D (medical insurance), and others can be claimed. Common exemptions include House Rent Allowance (HRA), Leave Travel Allowance (LTA), and the standard deduction of Rs. 50,000. Subtract these from the gross total income to calculate the net taxable income.

3. Identify the Applicable Tax Slabs

The old tax regime has different slabs based on the taxpayer’s age group:

Individuals below 60 years
Senior citizens (60-79 years)
Super senior citizens (80 years and above).

Surcharge on income tax

A surcharge on income tax is an additional charge levied on the tax liability of individuals and entities whose income exceeds specified thresholds. It is calculated as a percentage of the total income tax payable and aims to increase tax revenues from high-income earners. The surcharge rates vary depending on the income level, with higher rates applying to larger incomes. This mechanism ensures a progressive tax structure where those with higher earnings contribute a larger share to the tax pool.

1. Surcharge Rates for Individual Taxpayers

For individuals, the surcharge rates are based on income brackets:

Income between Rs. 50 lakh and Rs. 1 crore attracts a surcharge of 10%.
Income above Rs. 1 crore but up to Rs. 2 crore is subject to a 15% surcharge.
For income exceeding Rs. 2 crore but below Rs. 5 crore, the surcharge is 25%.
Income above Rs. 5 crore incurs the highest surcharge rate of 37%.

However, under the new tax regime, the highest surcharge rate is capped at 25%, even for incomes above Rs. 5 crore. This cap aims to limit the tax burden on ultra-high-income earners while maintaining a progressive tax system.

2. Surcharge Applicability for Other Taxpayers

Apart from individuals, the surcharge is also applicable to companies and other entities. For domestic companies, the surcharge is 7% if the income exceeds Rs. 1 crore but is less than Rs. 10 crore. A 12% surcharge applies if the income surpasses Rs. 10 crore. Foreign companies face different surcharge rates, with 2% for income between Rs. 1 crore and Rs. 10 crore, and 5% for income above Rs. 10 crore. This graded approach to surcharge rates helps ensure that higher-income entities contribute a fair share to the tax revenue.

Tips for Choosing Between the Old and New Income Tax Regimes

When choosing between the old and new income tax regimes, taxpayers should carefully evaluate their specific circumstances to determine which option is more beneficial. Here are five tips to help in the decision-making process:

Calculate your taxable income: Estimate your total income and subtract available deductions and exemptions to determine your taxable income under both regimes. This will help you compare the tax liability under each regime.
Consider your ability to claim deductions: If you can claim significant deductions under Section 80C, 80D, and other sections, the old regime may be more advantageous as it allows you to reduce your taxable income. However, if you cannot claim substantial deductions, the new regime may be more suitable.
Understand the impact of forfeiting deductions: Opting for the new regime means forfeiting several deductions and exemptions available in the old regime, such as HRA, standard deduction, and deductions under Sections 80C, 80D, and 80TTA. Evaluate how this will affect your overall tax liability.
Factor in future plans: Consider your long-term financial goals and plans, such as investing in tax-saving instruments or claiming deductions for medical expenses. The old regime may be more beneficial if you anticipate needing these deductions in the future.
Consult with a tax professional: Seek guidance from a tax professional who can help you analyze your specific situation, consider future plans, and provide personalized advice on which regime is more suitable for you.

By carefully considering these factors and seeking professional advice, taxpayers can make an informed decision between the old and new income tax regimes and optimize their tax savings.

Different types of Taxable Income in India

In India, various sources of income are subject to taxation. Understanding the different types of taxable income is crucial for accurate tax filing and compliance.

Taxable income sources in India include:

Business Income
Business income refers to profits earned from business activities, including self-employment, consultancy, or any commercial venture. This income is taxable under the Income Tax Act and is subject to applicable tax rates based on the nature of the business.
Salary or Pension
Income earned as salary or pension from employment is a common taxable income source. This includes basic salary, allowances, bonuses, and other perks received by individuals working in various sectors. Pension income received after retirement is also taxable.
Property Income
Income generated from property ownership, such as rental income from letting out residential or commercial properties, is taxable. Additionally, income from house property, including deemed rental income from self-occupied property, falls under this category.
Capital Gains Income
Capital gains arise from the sale of capital assets like stocks, real estate, or mutual funds. These gains can be categorised as short-term or long-term based on the holding period of the asset. Capital gains tax is applicable as per the prevailing tax laws.
Lottery, Races, and More Income
Income from sources like lotteries, horse races, card games, gambling, or any other speculative activities is considered taxable. Such income falls under the category of 'Income from Other Sources' and is subject to taxation at applicable rates.

Understanding the various taxable income sources is essential for taxpayers to accurately report their income, claim deductions, and comply with tax regulations. Proper documentation and adherence to tax laws can help individuals manage their tax liabilities effectively and avoid any penalties or legal issues related to tax evasion.

Other topics you might find interesting
Short Term Capital Gains Tax	Long Term Capital Gain Tax	Direct Tax Code 2025	Income Tax Return Extended Date
Assessment Year and Financial Year	Inheritance Tax	Long Term Capital Gain Tax on Property	Short Term vs Long Term Capital Gains

Tax Benefits of ELSS Funds in Budget 2024

Equity Linked Savings Scheme (ELSS) funds are a top investment choice for both salaried individuals and the self-employed, offering significant tax savings under Section 80C of the Income Tax Act. These funds are the only mutual funds eligible for tax deductions under this section, allowing investors to claim deductions up to Rs 1.5 lakh by investing in various tax-saving options. If Finance Minister Nirmala Sitharaman raises the Section 80C limit in her Budget 2024 presentation on July 23, investors in ELSS mutual funds stand to gain significantly. ELSS funds have a low lock-in period of just three years, shorter than other Section 80C investments, and provide high earning potential by investing in equity markets.

How to know which income tax slab you fall in?

To determine which income tax slab you fall into in India as of 2024, you need to assess your annual income and choose between the old and new tax regimes. Each regime has different rates and benefit.

Old Tax Regime

Deductions and Exemptions: This regime allows for various deductions and exemptions, such as those under Section 80C (investments in PPF, life insurance, etc.), 80D (medical insurance), and otheRs.
Tax Slabs:
- Income up to Rs. 2.5 lakh: Nil
- Income between Rs. 2.5 lakh and Rs. 5 lakh: 5%
- Income between Rs. 5 lakh and Rs. 10 lakh: 20%
- Income above Rs. 10 lakh: 30%
Additional Considerations: Standard deductions, House Rent Allowance (HRA), and Leave Travel Allowance (LTA) can further reduce taxable income.

New Tax Regime

Limited Deductions: This regime offers lower tax rates but with limited deductions and exemptions.
Tax Slabs:·
- Rs. 0- Rs. 3 lakh - Nil: If your annual income is between Rs. zero and Rs. 300,000, you don't pay any income tax.
- Rs. 3-7 lakh - 5%: If your income is between Rs. 300,001 and Rs. 700,000, you pay 5% tax on the amount exceeding Rs. 300,000.
- Rs. 7-10 lakh - 10%: If your income is between Rs. 700,001 and Rs. 1,000,000, you pay 10% tax on the amount exceeding Rs. 700,000.
- Rs. 10-12 lakh - 15%: If your income is between Rs. 1,000,001 and Rs. 1,200,000, you pay 15% tax on the amount exceeding Rs. 1,000,000.
- 12-15 lakh - 20%: If your income is between Rs. 1,200,001 and Rs. 1,500,000, you pay 20% tax on the amount exceeding Rs. 1,200,000.
- Above Rs. 15 lakh - 30%: If your income is above Rs. 1,500,000, you pay 30% tax on the amount exceeding Rs. 1,500,000.

TaxRebate: A rebate under Section 87A is available for individuals earning up to Rs. 7 lakh, resulting in no tax liability.

Key Differences:

Deductions: The primary difference lies in the availability of deductions and exemptions. The old regime allows for a wider range, while the new regime has limited options.
Tax Rates: The new regime generally offers lower tax rates compared to the old regime.
Simplicity: The new regime is simpler to calculate as it doesn't involve multiple deductions and exemptions.

Choosing the Right Regime:

Individuals need to carefully assess their financial situation and tax liabilities to determine which regime is more beneficial for them. Factors to consider include income level, available deductions, and investment patterns. It's advisable to consult with a tax professional or financial advisor for personalized guidance.

Conclusion

In conclusion, understanding the income tax slabs for the financial year 2024-25 in both the new and old tax regimes provides individuals with valuable insights into their tax obligations. The choice between the new and old regimes hinges on various factors such as income levels, available deductions, and personal financial goals. While the new regime offers lower tax rates with fewer deductions, the old regime provides a more traditional approach with higher tax rates but allows for a broader range of deductions. Ultimately, taxpayers must evaluate their unique circumstances and preferences to make informed decisions regarding which tax regime aligns best with their financial objectives. Regardless of the chosen regime, staying informed about the prevailing tax regulations remains essential for effective tax planning and compliance.

Frequently asked questions