The Union Budget 2025 brought significant changes to income tax slabs under the new regime, making it attractive for a larger segment of taxpayers. Understanding the current tax structure is the first step to optimising your tax outgo for FY 2025–26 (Assessment Year 2026–27).
New Tax Regime Slabs for FY 2025–26
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Note: Rebate under Section 87A: No tax payable if total income under new regime ≤ ₹12,00,000 (resident individuals). Plus standard deduction of ₹75,000 for salaried individuals.
Old Tax Regime Slabs (Below 60 Years)
| Income Range | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Which Regime is Better for You?
- New regime wins if: you have few deductions, salary ≤ ₹12L, or are a first-time taxpayer
- Old regime wins if: you have home loan interest (Sec 24), HRA, high 80C investments, and medical insurance (80D)
- Breakeven point: If your total deductions exceed ₹3.75 lakh, old regime may be beneficial
- Salaried: New regime is default from FY 2024–25 — opt-out before filing if old regime suits you
Key Deductions Allowed in Each Regime
| Deduction | New Regime | Old Regime |
|---|---|---|
| Standard Deduction (₹75,000) | ✅ Allowed | ✅ Allowed |
| Section 80C (₹1.5L) | ❌ Not allowed | ✅ Allowed |
| HRA Exemption | ❌ Not allowed | ✅ Allowed |
| Home Loan Interest (Sec 24b) | ❌ Not allowed | ✅ Allowed |
| Section 80D (Health Insurance) | ❌ Not allowed | ✅ Allowed |
| NPS Employer Contribution (Sec 80CCD(2)) | ✅ Allowed | ✅ Allowed |
Surcharge and Cess
- Health & Education Cess: 4% on tax payable
- Surcharge 10%: Income ₹50L–₹1Cr
- Surcharge 15%: Income ₹1Cr–₹2Cr
- Surcharge 25%: Income ₹2Cr–₹5Cr (new regime max 25%)
- Surcharge 37%: Income > ₹5Cr (old regime only)
Note: Need help computing your tax for FY 2025–26? Use IndUs Tax's free income tax calculator or speak to a CA.