
Income Tax Slabs 2025
The Union Budget 2025 has brought some much-needed relief to taxpayers across India. Finance Minister Nirmala Sitharaman announced a landmark reform—no income tax will be levied on annual incomes up to ₹12 lakh under the new tax regime, ensuring substantial savings for middle-class taxpayers. This decision marks a significant step towards simplifying India’s taxation framework while addressing the financial concerns of the masses.
Here’s everything you need to know about the Income Tax Slabs for Assessment Year 2025-26, the differences between the old and new regimes, and how to make an informed choice based on your income and deductions.
What Are the New Income Tax Slabs for AY 2025-26?
The revised income tax slabs under the new tax regime have introduced progressive tax rates to provide relief to individuals earning up to ₹25 lakh. This updated structure aims to ease the financial burden, especially for the middle class, while ensuring simplicity and efficiency.
Income Range (₹) | Tax Rate (%) |
---|---|
Up to 3,00,000 | 0% |
3,00,001 – 7,00,000 | 5% |
7,00,001 – 10,00,000 | 10% |
10,00,001 – 12,00,000 | 15% |
12,00,001 – 15,00,000 | 20% |
Above 15,00,000 | 30% |
Note: A rebate of up to ₹25,000 is available for incomes up to ₹7 lakh under the new tax regime, ensuring zero tax liability for a significant portion of taxpayers.
Special Highlights of the New Tax Regime
No Income Tax Up to ₹12 Lakh:
For AY 2025-26, individuals with incomes up to ₹12 lakh will not be required to pay any tax, making it an attractive option for middle-class taxpayers.
Reduced Tax Rates for Higher Brackets:
Taxpayers earning up to ₹25 lakh can enjoy tax benefits of up to ₹1.1 lakh, offering significant savings for the middle-income group.
Simpler Tax Filing:
With fewer exemptions and deductions, the new tax regime simplifies the filing process while reducing paperwork.
Default Tax Regime:
The new tax regime has been set as the default option since April 1, 2023. Taxpayers can still opt for the old regime if they find it more beneficial.
Credits: Aaj Tak
Old Tax Regime vs. New Tax Regime
Both tax regimes come with distinct features, and taxpayers must carefully evaluate their financial situation to choose the most suitable one.
Features | Old Tax Regime | New Tax Regime |
---|---|---|
Exemptions & Deductions | Available (e.g., 80C, 80D, HRA) | Not available |
Tax Rates | Higher | Lower |
Rebate for Income up to ₹5L | Available | Available |
Ease of Filing | More complex | Simpler |
Income Tax Slabs Under Old Tax Regime
While the new regime has been prioritized, the old regime remains available for those who prefer to claim deductions and exemptions.
For Individuals Below 60 Years
Income Range (₹) | Tax Rate (%) |
---|---|
Up to 2,50,000 | 0% |
2,50,001 – 5,00,000 | 5% |
5,00,001 – 10,00,000 | 20% |
Above 10,00,000 | 30% |
For Senior Citizens (60–80 Years)
Income Range (₹) | Tax Rate (%) |
---|---|
Up to 3,00,000 | 0% |
3,00,001 – 5,00,000 | 5% |
5,00,001 – 10,00,000 | 20% |
Above 10,00,000 | 30% |
For Super Senior Citizens (80+ Years)
Income Range (₹) | Tax Rate (%) |
---|---|
Up to 5,00,000 | 0% |
5,00,001 – 10,00,000 | 20% |
Above 10,00,000 | 30% |
Deductions Available Under the Old Tax Regime
Taxpayers opting for the old tax regime can avail of the following deductions:
Section 80C: Up to ₹1.5 lakh for investments in PPF, ELSS, LIC, etc.
Section 80D: Up to ₹25,000 for health insurance premiums (₹50,000 for senior citizens).
Section 80TTA: Deduction of up to ₹10,000 on interest earned from savings accounts.
Section 80CCD(1B): Additional ₹50,000 for contributions to the National Pension System (NPS).
House Rent Allowance (HRA) and Leave Travel Allowance (LTA) exemptions.
Surcharge Rates for High-Income Taxpayers
Income Range (₹) | Surcharge Rate (%) (New Regime) | Surcharge Rate (%) (Old Regime) |
---|---|---|
Up to 50 lakh | Nil | Nil |
50 lakh – 1 crore | 10% | 10% |
1 crore – 2 crore | 15% | 15% |
2 crore – 5 crore | 25% | 25% |
Above 5 crore | 25% | 37% |
How to Choose the Right Tax Regime?
When deciding between the old and new tax regimes, consider the following factors:
Annual Income: Analyze your total income and applicable tax rates.
Deductions and Exemptions: Calculate how many deductions (e.g., 80C, 80D, HRA) you are eligible for under the old tax regime.
Ease of Filing: If simplicity is your priority, the new tax regime may be the better choice.
FAQs
Who is eligible for the rebate under the new tax regime?
Individuals earning up to ₹7 lakh are eligible for a rebate of ₹25,000, ensuring zero tax liability.
What is the default tax regime from April 2023?
The new tax regime is the default option unless a taxpayer explicitly opts for the old regime.
Can taxpayers switch between regimes?
Yes, individuals without business income can choose their tax regime at the start of each financial year.
Are deductions like 80C and 80D allowed in the new regime?
No, most exemptions and deductions are not available under the new tax regime.
What is the tax rate for incomes above ₹15 lakh in the new regime?
The tax rate for incomes above ₹15 lakh is 30%.
Is the old tax regime still available?
Yes, taxpayers can choose the old tax regime if it offers better savings based on their deductions and exemptions.
The Income Tax Slabs 2025 announced in the Union Budget bring welcome relief to taxpayers, particularly the middle class. By raising the zero-tax threshold to ₹12 lakh and simplifying the tax structure, the government has taken a significant step towards equitable taxation. Whether you choose the new or old regime, evaluate your financial situation carefully to maximize your savings.
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