The new tax regime offers limited deductions, compared to old tax regime. Whereas, standard deduction of Rs.75,000, deduction under section 80CCD(2), and rebate of Rs.25,000 can be claimed under the new regime. Also, the taxpayers can benefit from relaxed income tax slabs under the new regime.
New Tax Regime Income Tax Slab Rates for FY 2025-26
In this article you will find everything you need to know about the Income Tax Slab Rates FY 2025-26 have been revised under the new tax regime. This guide compares the new and old tax regimes, deductions, rebates, and ITR deadlines in simple terms.
If you’re wondering how much tax you’ll be paying in FY 2025-26, you’re not alone. With changes in income tax slabs, new deductions, and some friendly government reliefs, it’s time to understand exactly where your income stands.
Table of Contents
Why Knowing Your Tax Slab Matters
Every individual taxpayer in India (except those with business income under the presumptive scheme) can choose between the old and new tax regimes every financial year. To make this choice wisely, you must:
- Know your taxable income, and
- Identify which income tax slab it falls under in both regimes
This will help you calculate your tax liability under each regime and select the one that saves you more money.
In this guide, you’ll find everything you need to know about the Income Tax Slab Rates FY 2025-26—including new and old tax regimes, rebates, and ITR deadlines—explained in clear, simple language
| Annual Income | Tax Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Key Benefits of the New Tax Regime
✔ Standard Deduction: ₹75,000 (earlier ₹50,000)
✔ Rebate under 87A: Raised to ₹60,000
✔ No Tax if income is up to ₹12 lakh (after rebate + standard deduction)
✔ Flat slabs for all categories—no separate rates for seniors
Good to know: No investments needed to claim tax benefits under the new regime.
Old Regime vs New Regime – What’s Better?
| Feature | Old Regime | New Regime FY 2025-26 |
|---|---|---|
| Standard Deduction | ₹50,000 | ₹75,000 |
| Section 80C Investment | Available | Not applicable |
| HRA/80D/80E/80G Deductions | Available | Not applicable |
| Rebate under 87A | ₹12,500 | ₹60,000 |
| Tax-Free Income Limit | ₹5 lakh | ₹12 lakh |
ITR Filing Deadlines for FY 2025-26
- Non-Audit Cases: 15th September 2025
- Audit Cases: 31st October 2025
Filing your returns based on the latest Income Tax Slab Rates FY 2025-26 ensures you avoid penalties and interest.
You can also download the income tax slabs in PDF format for quick reference and future use
Features of New Tax Regime
Tax rates are the same for all categories of Individuals, i.e. Individuals, Senior citizens, and Super senior citizens.
Rebate: Tax rebate up to Rs.25,000 is applicable if the total income does not exceed Rs. 7,00,000 (not applicable for NRIs).
Standard Deduction: Allowed for salaried employees is Rs.75,000.
Deduction under Family Pension: Increased from Rs.15,000 to Rs.25,000.
NPS Contribution: The deduction limit on employer’s contribution to NPS is 14% for FY 2024-25.
Surcharge: The highest surcharge rate is 25% as opposed to 37% in the old.
The new regime is the default tax regime.
Benefits Under Both Regimes
Home Loan Interest on Let-Out Property
As per section 24(b), interest paid for a home loan can be claimed as a deduction without limits for a let-out property. This deduction can be claimed irrespective of the regime chosen.
The deduction for self-occupied property is capped at a maximum of Rs.2 lakhs and is available only under the old regime.
Employer’s Contribution to Pension Scheme
Under section 80CCD(2), the employer’s contribution to the National Pension System is exempt up to 14% of basic pay under the new regime.
This limit is 12% of basic pay under the old regime.
Contribution to the Agniveer Scheme
For participants of the Agnipath Scheme, both the employer’s and employee’s contributions to the Agniveer Corpus Fund can be claimed as a deduction under section 80CCH.
Deduction for Additional Employee Cost
Running your own business? You can claim deduction on salaries paid to new employees.
Under section 80JJAA, 30% of the cost incurred by newly hired employees could be deducted upon satisfaction of certain conditions.
If the business is newly started, 30% of the total employee cost can be claimed as a deduction, as all employees are newly hired.
Exemption on Gifts
Gifts received in cash or kind from relatives are always tax-exempt.
Gifts received at special occasions like weddings and inheritances are also always tax-exempt.
Gifts received in any other situation than specified above are totally exempt when they are up to Rs.50,000. Gifts received above the limit are fully taxable.
Gifts can be received in cash or in kind. If an asset is received in a concessional amount, the concession would be exempt if its value does not exceed Rs.50,000.
Commuted Pension
The pension amount received as a lump sum on retirement is called commuted pension.
Commuted pension received by an employee upon retirement is partly exempt.
The quantum of exemption allowed differs based on whether the employee is being provided gratuity.
If the employee receives a gratuity, one-third is exempt, whereas if the employee does not receive a gratuity, half is exempt.
Note: For government employees, the whole of the commuted pension is exempt, whether or not they receive a gratuity.
Gratuity
Gratuity exemption can be claimed for both regimes. Gratuity exemption is calculated based on whether the gratuity is covered under the Payment of Gratuity Act or not.
When Covered Under Payment of Gratuity Act
Least of the following is exempt:
Actual gratuity received
Rs.20 lakhs
Last drawn salary 15/26 for every completed year of service. (part-year served is considered as a full year for computation of gratuity)
When Not Covered Under Payment of Gratuity Act
Least of the following is exempt:
Actual gratuity received
Rs.20 lakhs
Last drawn salary/2 for every completed year of service. (part-year served is ignored)
Note: Gratuities received by central government employees, veterans from the armed forces, and members of the civil services are fully exempt.
How to Know Which Income Tax Slab You Fall In (FY 2025-26)
To know which income tax slab you fall into for FY 2025-26, start by calculating your total taxable income—this includes income from salary, business, rent, or other sources. If you choose the old tax regime, you can claim exemptions and deductions like HRA, 80C, and 80D before calculating tax. Under the new tax regime, deductions are limited, but tax rates are lower. Once you have your taxable income, compare it with the latest slab rates under both regimes to see where you fit and choose the option that results in the lowest tax payable.