New Tax regime - Income Tax Slab in India

Latest Income Tax Slabs Under the New Tax Regime for FY 2025–26

Check the latest income tax slabs under the new tax regime for FY 2025 - 26, including updated rates, surcharge, cess and applicability.

Written by : Knowledge Centre Team

2026-01-02

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15 minutes read

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Understanding the complex system of income tax is a daunting task, as taxpayers need to comprehend the nuances of how income tax slabs work under both the old and new tax regimes. The determination of income tax slabs becomes a crucial component of financial policy, as governments endeavour to achieve a balance between maintaining fiscal discipline and offering vital services. The blog explains the latest income tax slabs for FY 2025-26 (AY 2026-27) under the new default tax regime, the optional old regime slabs, taxable incomes, and many more in further sections.

Key Takeaways

  • FY 2025-26 new tax regime slabs start at 0-4L Nil, 4-8L 5%, 8-12L 10%, 12-16L 15%, and above 24L 30%

  • Old regime offers ₹2.5L basic exemption and allows deductions like 80C, 80D, and home loan interest

  • Standard deduction in the new regime is now ₹75,000 for salaried taxpayers in FY 2025-26

  • Section 87A rebate covers taxable income up to ₹12L in the new regime, making tax zero up to that limit

  • You can switch between tax regimes yearly; the new regime offers lower slabs but limited deductions

What is an Income Tax Slab?

Taxpayers are classified into income tax slabs according to their income range. In the tax slab system used for income tax in India, different tax rates apply to different income bands rather than a single flat rate on the entire income, which makes it a progressive taxation structure. Individuals with higher incomes pay taxes at higher income tax slabs proportionate to their increased income under this progressive taxation scheme.

Through income tax slabs in India, the government aims to provide a fair taxation structure for all citizens while raising revenue for public expenditure. For this reason, the government announces changes to the Union Budget and frequently reviews slab rates, rebate limits and other tax provisions.

Now that you know what income tax slabs are, let's take you through the different slabs under the old and new tax regimes for a better understanding.

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Income Tax Slab For FY 2025-26

Listed below are numerous types of income tax slabs for FY 2025-26. Keep scrolling through to know the details:

New Tax Regime:

Budget 2020 brought in a new tax system that changed the tax slabs and provided taxpayers with reduced tax rates. However, those who opt for the new income tax slab cannot claim several exemptions and deductions, including HRA, LTA, Section 80C, Section 80D and more

The new regime has gradually been made more attractive through subsequent Budgets, and from FY 2023-24 onwards, it became the default regime. For FY 2025-26, the basic exemption limit, slab structure and rebate threshold have been further enhanced, especially for middle-income taxpayers. 

  • Income Tax Slab for FY 2024-25: To understand how today’s rules have evolved, it helps to first look at the income tax slab for AY 2025-26 that applied to income earned in FY 2024-25:
Income SlabsIncome Tax Rates
₹0 - ₹3,00,000Nil
₹3,00,001 - ₹7,00,0005% (tax rebate u/s 87A is available)
₹7,00,001- ₹10,00,00010%
₹10,00,001 - ₹12,00,00015%
₹12,00,001 - ₹15,00,00020%
₹15,00,001 - ₹15,00,00025%
>₹15,00,00030%
  • New Regime Tax Slab FY 2025-26: Use this updated new regime tax slab for FY 2025-26 (AY 2026-27) to understand how much income tax you may need to pay on your taxable income in the current year.
Income SlabsIncome Tax Rates
₹0 - ₹4,00,000NIL
₹4,00,001 - ₹8,00,005%
₹8,00,001 - ₹12,00,00010%
₹12,00,001 - ₹16,00,00015%
₹16,00,001 - ₹20,00,00020%
₹20,00,001 - ₹24,00,00025%
>₹24,00,00030%

Old Tax Regime Slabs:

The old regime existed before the implementation of the new regime. Within this system, more than 70 exemptions and deductions, such as those for HRA and LTA, decrease taxable income and consequently lessen tax obligations. Among these deductions, Section 80C stands out as particularly popular and beneficial, permitting a reduction in taxable income of up to ₹1.5 lakh. Taxpayers can choose between the old and new tax regimes, with the new regime being the default. The income tax rates under the old tax regime remained unchanged for FY 2021-22, 2022-23, and 2023-24.

Income SlabsIndividuals Below The Age Of 60 Years and NRIs
Up to ₹2.5 lakhNIL
₹2.5 lakh - ₹5 lakh5%
₹5 lakh - ₹10 lakh20%
>₹10 lakh30%
Income SlabsTax Slabs for Seniors (Aged 60 Years But Less Than 80 Years)
₹0 - ₹3 lakhNIL
₹3 lakh - ₹5 lakh5%
₹5 lakh - ₹10 lakh20%
>₹10 lakh30%
Income SlabsIncome Tax Slab for Super Senior Citizens (Aged 80 Years And Above)
₹0 - ₹5 lakh*NIL
₹5 lakh - ₹10 lakh20%
>₹10 lakh30%

Comparison of Tax Rates under the New Tax Regime & Old Tax Regime 

This section compares the income tax rates under both the old and new tax regimes so you can quickly see which option may be more tax-efficient for your income level.

SlabsOld Regime Tax Slab for FY 2025-26New Tax Regime slabs  for FY 2025-26

 

Less than 60 years

60 to 80 years

Greater than 80 years

FY 2024-25

FY 2025-26

₹0 - ₹2,50,000

NIL

NIL

NIL

NIL

NIL

₹2,50,001 - ₹3,00,000

5%

NIL

NIL

NIL

NIL

3,00,001 – 4,00,000

5%

5%

NIL

5%

NIL

₹4,00,001 - ₹5,00,000

5%

5%

NIL

5%

​5%

₹5,00,001 - ₹8,00,000

20%

20%

20%

5-10%

5%

₹8,00,001 - ₹10,00,000

20%

20%

20%

10%

10%

₹10,00,001 - ₹16,00,000

30%

30%

30%

15-20%

10%–15% range (old structure) ​15%

₹16,00,001 - ₹20,00,000

30%

30%

30%

30%

20%

₹20,00,001 - ₹24,00,000

30%

30%

30%

30% 

25%

₹24,00,000

30%

30%

30%

30%

30%

trivia-img

Did You Know?

In FY 2025–26, salaried individuals get a ₹75K standard deduction plus ₹12L rebate, making income up to ₹12.75L tax-free.
 

Source: PIB

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Surcharge on Income Tax for FY 2025–26 (AY 2026–27) 

The surcharge rate for individuals is different from that of other taxpayers. Below is the table with the rates of surcharge tax slab for AY 2026-27 for various types of taxpayers:

Income Tax for Individual/ HUF/ AOP/ BOI/ Artificial Judicial Person:

The following surcharge rates apply to income tax payable by individuals, HUFs, AOPs, BOIs and artificial juridical persons once their total income crosses the specified thresholds for a given financial year.

Income Tax SlabSurcharge Rate on Income Tax
Less than ₹50 LakhsNil
₹50 Lakhs - ₹1 Crore10%
₹1 Crore - ₹2 Crore15%
₹2 Crore - ₹5 Crore25%*
More than ₹5 Crore37%*

Income Tax for Firm/LLP/Local authorities/Co-operative Society:

The surcharge rates below apply to the income tax liability of firms, LLPs, local authorities and co-operative societies once their taxable income exceeds the specified limits for the year.

Income Tax SlabSurcharge Rate on Income Tax 
More than ₹1 Crore12%

Income Tax for a Domestic Company:

The following table shows the applicable surcharge rates on income tax for domestic companies based on their total income and the tax regime they have opted for.

Income Tax SlabSurcharge Rate on Income Tax 
₹1 Crore - ₹10 Crore7%
More than ₹10 Crores12%

Income Tax for Foreign Companies:

The surcharge rates given here apply to foreign companies on the income tax computed in India, depending on the slab of total income they fall under.

Income Tax SlabSurcharge Rate on Income Tax 
₹1 Crore - ₹10 Crore2%
More than ₹10 Crore5%

Steps to Calculate Income Tax from Income Tax Slabs 

You can use an income tax calculator for FY 2025–26 to estimate your tax liability under both the old and new tax regimes. The inputs you use will differ slightly depending on which regime you choose  

If you are checking tax under the old tax regime (where most deductions are allowed):

  • Select your age

  • Enter your annual income (salary, business/profession, other income)

  • Enter your investment details under Section 80C, 80CCC, 80CCD (1)

  • Enter your medical insurance premium paid under Section 80D if you have a health insurance plan

  • Enter additional NPS Self Contributions up to ₹50000 under Section 80CCD(1B)

  • Enter employer contribution for NPS under Section 80CCD (2)

If you are checking tax under the new tax regime (default from FY 2025–26):​

  • Select your age and financial year

  • Enter your annual income from salary and other sources

  • Enter the standard deduction and eligible employer NPS contribution under Section 80CCD(2) only, as most other deductions like 80C and 80D are not allowed in the new regime

After completing these procedures, you will receive an overview of your taxable income, investments, annual income, and the amount of tax due.

Note: For any field that does not apply to you, you can put "0".

Forms You Should Know About 

The following table lists some of the most commonly used income tax forms and what they are used for, so you can quickly identify which form applies to your situation.

Form No.: 3CAAudit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the business or profession of a person have been audited under any other law
Form No.: 3CBAudit report under section 44AB of the Income-tax Act, 1961, in the case of a person referred to in clause (b) of sub-rule (1) of rule 6G
Form No.: 3CDStatement of particulars required to be furnished under section 44AB of the Income-tax Act, 1961
Form No.: 3CEBReport from an accountant to be furnished under section 92E relating to international transaction(s) or specified domestic transactions
Form No.: 10AApplication for registration of charitable or religious trust or institution under section 12A(1)(AA) of the Income-tax Act, 1961 (initial or fresh registration)
Form No.: 10BAudit report under section 12A(b) of the Income-tax Act, 1961, in the case of charitable or religious trusts or institutions
Form No.: 15CAInformation to be furnished for payments, chargeable to tax, to a non-resident not being a company or to a foreign company
Form No.: 15CBCertificate of an accountant relating to remittances chargeable to tax in India
Form No.: 15GDeclaration under sub-sections (1) and (1A) of section 197A of the Income-tax Act, 1961, to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax
Form No.: 15HDeclaration under sub-section (1C) of section 197A of the Income-tax Act, 1961, to be made by an individual who is of the age of sixty years or more claiming certain receipts without deduction of tax
Form No.: 16Certificate under section 203 of the Income-tax Act, 1961 for tax deducted at source from income chargeable under the head "Salaries"
Form No.: 16ACertificate under section 203 of the Income-tax Act, 1961 for tax deducted at source
Form No.: 26ASAnnual Tax Statement under section 203AA, showing TDS/TCS and certain tax credits; from recent years, detailed income and transaction data is additionally provided through AIS and TIS on the Compliance portal
Form No.: 35Appeal to the Commissioner of Income-tax (Appeals)
Form No.: 36Form of appeal to the Appellate Tribunal
Form No.: 49AApplication for Allotment of Permanent Account Number [In the case of Indian Citizens/Indian Companies/Entities incorporated in India/Unincorporated entities formed in India]
Form No.: 49AAApplication for Allotment of Permanent Account Number [Individuals not being a Citizen of India/Entities incorporated outside India/ Unincorporated entities formed outside India]
Form No.: 49BForm of application for allotment of Tax Deduction and Collection Account Number under section 203A of the Income-tax Act, 1961
Form No.: 60Form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in Rule 114B

What is the Taxable Income? 

Taxable income is he portion of your total income on which income tax is calculated for a given financial year. It is computed by aggregating income under the five heads of income, subtracting eligible exemptions and deductions, and then applying the applicable slab rates under the old or new tax regime. Taxable income in India includes wages, salaries, bonuses, tips, investments, and various unearned income types.

It can include both regular (earned) income, such as salary or business profits, and certain passive or unearned income, such as interest, dividends and winnings from lottery or games. Gains from the sale of capital assets during the year are also part of taxable income, subject to the specific rules for capital gains.

For individual taxpayers, taxable income is arrived at by starting from “gross total income” and then subtracting deductions available under Chapter VI-A (such as sections 80C, 80D, 80CCD, etc.), along with any other eligible reliefs. Businesses and professionals generally compute taxable income by deducting allowable business expenses from gross receipts to arrive at profits and gains from business or profession, and then reducing any eligible deductions as per the Income Tax Act.

Different Types of Taxable Income in India 2025

Listed below are the different types of taxable incomes in India:

  1. Income from salary (including basic pay, allowances, perquisites and bonuses)​

  2. Income from house property (such as rent received from let-out property)​

  3. Profits and gains from a business or profession​

  4. Capital gains (short-term and long-term) on the sale of assets like property, shares and mutual funds​

  5. Income from other sources (for example, interest, dividends, lottery winnings and certain gifts)​

  6. Dividends (taxable in the hands of the shareholder under “Income from other sources”)​

  7. Interest income on fixed deposits, savings accounts and other investments​

  8. Winnings from lottery, game shows, betting and similar activities​

  9. Taxable allowances such as certain components of House Rent Allowance (HRA), entertainment allowance and other cash allowances, to the extent not exempt​

  10. Employee compensation, such as bonuses, commissions and ex gratia received from the employer. ​

Note: Agricultural income is generally exempt from income tax under section 10(1), but may be considered for rate purposes in certain cases, so it is usually not treated as taxable income itself.​

“Service tax” no longer applies, as it has been fully subsumed by GST since 1 July 2017.

How to Calculate Taxable Income? 

Calculating taxable income is simple and hassle-free. The consumer must total every income received in order to determine the amount of income tax that must be paid. Deductions and exemptions reduce tax liability. An income tax calculator FY 2025-26 is accessible to the general public on Income Tax India's official website. The user can compute their income using the tax calculator by entering a few details.

Listed below are a few details that need to be filled out while calculating the tax:

  • Assessment year (for income earned in FY 2025–26, this will be AY 2026–27)

  • Preferred tax regime (old or new)

  • Taxpayer category and age (individual, senior citizen, HUF, etc.)

  • Residential status

  • Income from salary

  • Income from house property

  • Capital gains

  • Income from other sources

  • Profits and gains from business or profession (if applicable)

  • Agricultural income (if any, for rate purposes where required)

  • Deductions

Points to Consider When Selecting the Tax Regime in 2025 

It makes sense to choose the regime with the lower tax burden, and it's crucial to inform the employer of this decision so the correct amount of Tax Deducted at Source (TDS) can be withheld from the employee's pay.

Here are some other top points to consider while choosing the tax regime:

  • Assess Your Investment Choice: Consider the way in which your investment decisions correspond with the tax advantages provided by each tax regime. Several investments under the previous system offered tax benefits, such as NPS (National Pension Scheme) and ELSS (Equity-Linked Savings Scheme). On the other hand, the new system might reward investments with smaller tax advantages but larger post-tax profits.
  • Compare Tax Slabs and Rates: Analyse the income tax slab rates for each system. While the new tax slab system offers lower income tax slab rates but fewer deductions, the old system offers various tax slabs at varying rates. Determine which tax system is more advantageous for you by calculating your tax liability under each one based on your income level.
  • Analyse Available Deductions and Exemptions: Examine the exemptions and deductions that were offered under the previous system and determine how important they were in lowering your tax obligation. Compare these with the current regime's restricted deductions. Think about typical deductions such as Section 24 (interest on home loans), Section 80D (health insurance premiums), and Section 80C (investments). Choose the regime that will save you the most money on taxes.
  • Consider Long-Term Implications: While immediate tax savings are significant, you also need to think about the decision's long-term effects. Analyse the chosen regime's compatibility with your future tax planning, investment plans, and financial objectives. Make sure your choice considers your overall financial goals in addition to the immediate tax savings.]

How Do You Know Which Income Tax Slab You Fall Into? 

Currently, there are two different income tax regimes: the old and the new tax regimes. Under both the regimes, taxpayers can avail themselves of tax benefits, depending on their income level and the deductions or exemptions they are eligible to claim.

The finance minister has now announced that under the new tax regime of the income tax, the rebate under Section 87A is available with taxable income up to ₹12 lakh in FY 2025–26 (AY 2026–27), effectively making income up to this level tax-free in the new regime.. Apart from that, the surcharge rate on income of ₹5 crore and above has decreased from 37% to 25%.

Wrapping Up 

Both the old and the new tax regime under the income tax slab for FY 2024-25 (AY 2026–27) have their benefits. The old tax regime focuses on inculcating saving habits, while the new tax regime is easy to understand and simplifies the taxation process. Deciding between the two regimes largely hinges on one's income tax slab, and individuals can use tax calculators to determine which regime offers the most favourable outcome for their financial situation. 

Yet, amidst this decision-making process, the fundamental responsibility of every citizen remains constant: to ensure the timely payment of taxes. It is up to each individual to fulfil their tax obligations on time, contributing their fair share to the functioning of society and the nation's development. While the choice between tax regimes may vary, the commitment to responsible tax citizenship remains essential.

Glossary:

  1. Progressive Taxation Scheme: A tax system where tax rates increase as income levels rise
  2. NPS: A government-sponsored retirement savings scheme that allows individuals to contribute regularly towards their pension fund
  3. Taxable income: Portion of total income on which tax is computed after exemptions and deductions.
  4. Surcharge: Extra tax on the income tax amount when total income crosses specified high-income thresholds.
  5. Section 87A: Relief that reduces tax for resident individuals with taxable income within a specified limit
glossary-img
Uncertain About Insurance

FAQs

There are benefits and drawbacks to both the new and the old tax systems. While the new tax regime favours employees with lower salaries and assets, leading to fewer deductions and exemptions, the old tax regime encouraged taxpayers to develop a savings habit.

Correction for old regime: For ₹7 lakh taxable income (after deductions) in FY 2025–26:

  • New regime: ₹0 tax (rebate u/s 87A up to ₹12 lakh)​

  • Old regime: ₹12,500 tax (rebate u/s 87A covers only up to ₹5 lakh)

The basic exemption limit is ₹4 lakh. Most Chapter VI-A deductions (80C, 80D etc.) are not available, but standard deduction (₹75,000 for salaried) and employer NPS contribution u/s 80CCD(2) are allowed.

Yes, salaried individuals can switch between regimes every year when filing ITR. New regime is default; opt out for old regime via Form 10-IEA if needed (business income has restrictions).

Employee contribution u/s 80CCD(1) is not allowed in new regime (part of ₹1.5L 80C limit in old regime). Employer contribution u/s 80CCD(2) up to 14% of salary (10% in old regime) is allowed in both.

Self-occupied homes are not eligible for any deductions under the new tax system. This implies that the interest paid on a home loan used to buy the house cannot be written off under the new tax system.

Latest income tax slab rates for FY 2025-26 (AY 2026-27):​

  • New tax regime tax slabs: 0-4L: Nil, 4-8L: 5%, 8-12L: 10%, 12-16L: 15%, 16-20L: 20%, 20-24L: 25%, >24L: 30%

  • Old regime: <60yrs: 0-2.5L Nil, 2.5-5L 5%, 5-10L 20%, >10L 30%

For Financial Year (FY) 2025-26, salaried individuals choosing the new tax regime can claim a standard deduction of ₹75,000, which is higher than the ₹50,000 deduction available in both the old regime and the previous year's new regime.

If you have both salary income and rental income, you can opt for the new tax regime, as it allows claiming the deduction on the interest paid for a let-out property under Section 24(b).

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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