Summary: For the Financial year 2025-26, individual income tax slabs in India have been revised with changes aimed at making te new tax regime more appealing and more beneficial for the middle class individuals. In the new Budget 2025, income upto ₹4,00,000 is tax-free, with progressively higher upto 30% for income above ₹24,00,000. The changes comes with a rebate of ₹60,000 for individuals upto income of ₹12,00,000 and standard deduction of ₹75,000 for salaried individuals, an increased family pension.
Introduction : The Budget 2025 has introduced significant changes to the individual taxation with new income tax slabs. While the new regime offers fewer deductions and exemptions, its lower slab rates and simplified structure may be advantageous for many taxpayers compared to the old regime.
New Income Tax Slab Rates : The new tax regime now has seven slabs, starting with 0% for income upto ₹4,00,000 and afterwards following tax slabs are applicable :
| Income for FY 2025-2026 | Income Tax Rates |
| Income upto ₹4,00,000 | 0% |
| ₹4,00,000 – ₹8,00,000 | 5% on income above ₹4,00,000 |
| ₹8,00,000 – ₹12,00,000 | ₹20,000 + 10% on income above ₹8,00,000 |
| ₹12,00,000 – ₹16,00,000 | ₹60,000 + 15% on income above ₹12,00,000 |
| ₹16,00,000 – ₹20,00,000 | ₹1,20,000 + 20% on income above ₹16,00,000 |
| ₹20,00,000 – ₹24,00,000 | ₹2,00,000 + 25% on income above ₹20,00,000 |
| Above ₹24,00,000 | ₹3,00,000 + 30% on income above ₹24,00,000 |
*Surcharge and education cess will be applicable in addition to the slab rates.
Key exemptions/deductions available under new regime along with changes (if any) as per Budget 2025:
- In case of Salaries Individuals, the standard deduction limit is ₹75,000.
- Family pension deduction increased from ₹15,000 to ₹25,000.
- Employer’s NPS contribution deduction u/s 80CCD (2) is 14%.
- Resident individuals can claim rebate u/s 87A of up to ₹60,000 and effective tax-free salary income turns out to be ₹7,75,000(Including standard deduction of ₹75,000)
- Exemption on voluntary retirement u/s 10(10C), Gratuity u/s 10(10), Leave encashment u/s 10(10AA) can continue to be availed.
- Deductions on allowances, including daily allowance, conveyance allowance, transport allowance for individuals with disabilities, and compensation for travel expenses on tour or transfer, continue to be available.
Comparison between New Regime Slabs (FY 2024-25 vs. FY 2025-26):
| Income for FY 2024-25 | Income Tax Rates | Income for FY 2025-26 | Income Tax Rates |
| Income up to ₹3,00,000 | 0% | Income upto ₹4,00,000 | 0% |
| ₹3,00,000 – ₹ 7,00,000 | 5% on income above ₹3,00,000 | ₹4,00,000 – ₹8,00,000 | 5% on income above ₹4,00,000 |
| ₹7,00,000 – ₹10,00,000 | ₹20,000 + 10% on income above ₹7,00,000 | ₹8,00,000 – ₹12,00,000 | ₹20,000 + 10% on income above ₹8,00,000 |
| ₹10,00,000 – ₹1,200,000 | ₹50,000+ 15% on income above ₹10,00,000 | ₹12,00,000 – ₹16,00,000 | ₹60,000 + 15% on income above ₹12,00,000 |
| ₹12,00,000 – ₹15,00,000 | ₹80,000+20% on income above ₹12,00,000 | ₹16,00,000 – ₹20,00,000 | ₹1,20,000 + 20% on income above ₹16,00,000 |
| ₹20,00,000 – ₹24,00,000 | ₹2,00,000 + 25% on income above ₹20,00,000 | ||
| Above ₹15,00,000 | ₹1,40,000+ 30% on income above ₹15,00,000 | Above ₹24,00,000 | ₹3,00,000 + 30% on income above ₹24,00,000 |
*Surcharge and education cess will be applicable in addition to the slab rates.
Conclusion: The new regime offers simplicity and lower rates. Accordingly, an individual must mindfully plan their savings and expenditure accordingly.
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