Income Tax Slabs for FY 2024-25 & FY 2025-26 (New & Old Tax Regime Rates)

The income tax system in India is progressive, meaning the Tax Rate increases as an individual's Income rises.

The Income-tax Act, 1961 provides two regimes:

• Old Tax Regime: Allows various deductions and exemptions.
• New Tax Regime: Offers lower tax rates with limited exemptions.

Budget 2025 Highlights

• Nil Tax Liability for Income up to Rs. 12 Lakhs: Due to increased rebate under Section 87A.
• Rebate Increased to Rs. 60,000: Previously Rs. 25,000 under the new regime.

Income Tax Slabs for FY 2025-26 (New Tax Regime)

• Basic Exemption Limit: Increased to Rs. 4,00,000.
• Rebate: Not applicable for incomes taxed at special rates (e.g., Capital gains under Section 112A).
• Marginal Relief: Still applicable.

Surcharge and Cess Details

• Surcharge: Applicable on income exceeding Rs. 50 lakh, with rates ranging from 10% to 37% based on income slabs.
• Health and Education Cess: 4% on the total income tax and applicable surcharge.

Income Tax Slabs for FY 2025-26 (Old Tax Regime)

• Deductions Available: Under sections like 80c, 80D, HRA, etc.
• Standard Deduction: Rs. 50,000 for salaried individuals.
• Rebate Under Section 87A: Applicable for income up to Rs. 5,00,000.

What is an Income Tax Slab?

An income tax slab system categorises taxpayers into different income ranges, with specific tax rates for each. As income increases, the tax rate applied also rises, ensuring a fair and progressive tax structure. These slabs are typically revised during the annual budget to reflect Economic Conditions.

Key Differences Between Old and New Regimes

• Deductions & Exemptions: Old regime allows deductions like 80C, HRA; new regime offers minimal exemptions.
• Tax Rates: New regime has lower rates but fewer deductions.
• Flexibility: Old regime benefits those with high deductions; new regime suits those with fewer investments.

Choosing Between Old and New Regimes

• Investment Patterns: If you invest in tax-saving schemes, the old regime may be beneficial.
• Income Level: Higher incomes with fewer deductions may find the new regime advantageous.
• Family Structure: Salaried individuals with HRA benefits may prefer the old regime.

Income Tax Slabs for FY 2024-25 (New Tax Regime)

• Rebate: Up to Rs. 25,000 for incomes not exceeding Rs. 7,00,000 (not applicable for NRIs).
• Standard Deduction & Family Pension Deduction: Enhanced for additional tax relief.

Income Tax Slabs for FY 2024-25 (Old Tax Regime)

• Deductions Available: Under sections like 80C, 80D, HRA, etc.
• Standard Deduction: Rs. 50,000 for salaried individuals.
• Rebate Under Section 87A: Applicable for income up to Rs. 5,00,000.

Old vs New Tax Regime Slabs Comparison for FY 2024-25 (AY 2025-26)

Recent Changes and Their Impact

• Higher Rebate Limit: Provides relief to middle-income earners.
• Increased Basic Exemption: Benefits low-income groups.
• Shift Towards New Regime: Simplifies compliance but reduces deductions.

Stay tuned for more updates on the Income Tax Slabs and implications from Budget 2025.