Income Tax Slab for FY 2024-25 & FY 2025-26: An Overview

Stay informed on the updated income tax slab rates and choose the best tax regime for your financial needs.

Income Tax Slab for FY 2024-25 & FY 2025-26

Examine the updated tax regime rates for effective financial planning

Gigi Joseph

Created: 3rd February, 2025 5:41 PM, last update:3rd February, 2025 5:49 PM

Income Tax Rates 2025-26

Income Tax Slabs for FY 2024-25 & FY 2025-26: Key Highlights
(New vs. Old Tax Regimes)

Budget 2025 Updates (FY 2025-26 - New Regime)

  1. Basic Exemption Limit Increased:

    • ₹4,00,000 (up from ₹3,00,000).

  2. Rebate u/s 87A Enhanced:

    • ₹60,000 (previously ₹25,000), making income up to ₹12,00,000 tax-free.

  3. Revised Tax Slabs (FY 2025-26):

    Income Slab (₹) Tax Rate
    Up to 4,00,000 0%
    4,00,001 – 8,00,000 5%
    8,00,001 – 12,00,000 10%
    12,00,001 – 16,00,000 15%
    16,00,001 – 20,00,000 20%
    20,00,001 – 24,00,000 25%
    Above 24,00,000 30%

FY 2024-25 Tax Slabs (AY 2025-26)

New Tax Regime

  • Default Regime: Automatically applies unless opted out via Form 10-IEA.

  • Standard Deduction: Increased to ₹75,000 (from ₹50,000).

  • Tax Slabs:

    Income Slab (₹) 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%

  • Rebate u/s 87A: Tax-free income up to ₹7,00,000.

Old Tax Regime

  • Slabs (Resident Individuals):

    Income Slab (₹) Below 60 Years 60–80 Years Above 80 Years
    Up to 2,50,000 0% 0% 0%
    2,50,001 – 3,00,000 5% 0% 0%
    3,00,001 – 5,00,000 5% 5% 0%
    5,00,001 – 10,00,000 20% 20% 20%
    Above 10,00,000 30% 30% 30%

  • Rebate u/s 87A: Tax-free income up to ₹5,00,000.

Key Changes & Features

  1. Surcharge Adjustments:
    • New Regime: Max surcharge reduced to 25% (from 37%).
    • Old Regime: Surcharge remains up to 37% for income >₹5 crore.
  2. Deductions/Exemptions:
    • New Regime: Fewer exemptions (e.g., no HRA, Section 80C).
    • Old Regime: Full exemptions (HRA, LTA, Section 80 deductions).
  3. Family Pension Deduction: Increased to ₹25,000 under new regime.

Which Regime to Choose?

  • New Regime Benefits:
    • Salaried individuals with income ≤₹15 lakh and fewer investments.
    • Simplified filing with lower rates.
  • Old Regime Benefits:
    • Senior citizens (higher exemption limits).
    • Those claiming deductions (e.g., home loan interest, insurance premiums).

Example Calculation

Scenario: ₹8,00,000 taxable income (FY 2024-25).

  • New Regime:
    • Tax: ₹5% on ₹4,00,000 (₹20,000) + ₹10% on ₹1,00,000 (₹10,000) = ₹30,000 (+4% cess).
  • Old Regime:
    • Tax: ₹12,500 (5% on ₹2.5L–5L) + ₹60,000 (20% on ₹3L) = ₹72,500 (+4% cess).

Final Takeaways

  1. New Regime: Lower rates but fewer deductions; ideal for minimal investors.
  2. Old Regime: Better for high deductions (e.g., home loans, insurance).
  3. Rebate Boost: Up to ₹12 lakh tax-free in FY 2025-26 under new regime.

Always calculate tax liability under both regimes to optimize savings!