New Income Tax Slabs for FY 2025–26 (New Regime) New Regime VS Old Regime
As of the financial year 2025–26 (assessment year 2026–27), the Indian government has revised the income tax slabs under the new tax regime, effective from April 1, 2025. This regime is now the default option for taxpayers, although individuals can still opt for the old regime by filing Form 10-IEA.
New Income Tax Slabs for FY 2025–26 (New Regime)
| Annual Income (₹) | 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% |
These revised slabs aim to reduce the tax burden on middle-income earners and stimulate consumption. Notably, individuals with annual incomes up to ₹12 lakh are now exempt from paying income tax under the new regime.
It's important to note that the new regime offers limited deductions and exemptions compared to the old regime. For instance, deductions under Section 80C (investments in PPF, ELSS, etc.) and exemptions for House Rent Allowance (HRA) are not available. However, a standard deduction of ₹75,000 is provided for salaried individuals.
Let's compare the tax liabilities under the new and old tax regimes for the financial year 2025–26 (assessment year 2026–27) for a salaried individual with an annual income of ₹15,00,000.
New Tax Regime (FY 2025–26)
Income Tax Slabs:
-
Up to ₹4,00,000: 0% tax
-
₹4,00,001 – ₹8,00,000: 5% tax
-
₹8,00,001 – ₹12,00,000: 10% tax
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₹12,00,001 – ₹16,00,000: 15% tax
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₹16,00,001 – ₹20,00,000: 20% tax
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₹20,00,001 – ₹24,00,000: 25% tax
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Above ₹24,00,000: 30% tax
Standard Deduction: ₹75,000 for salaried individuals
Tax Calculation:
-
Gross Income: ₹15,00,000
-
Less: Standard Deduction: ₹75,000
-
Net Taxable Income: ₹14,25,000
Tax on Net Taxable Income:
-
₹0 – ₹4,00,000: 0% → ₹0
-
₹4,00,001 – ₹8,00,000: 5% on ₹4,00,000 → ₹20,000
-
₹8,00,001 – ₹12,00,000: 10% on ₹4,00,000 → ₹40,000
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₹12,00,001 – ₹14,25,000: 15% on ₹2,25,000 → ₹33,750
Total Tax Before Cess: ₹93,750
Add: Health and Education Cess (4%): ₹3,750
Total Tax Payable: ₹97,500
Old Tax Regime (FY 2025–26)
Under the old regime, taxpayers can claim various deductions and exemptions, such as:
-
Standard Deduction: ₹50,000
-
Section 80C Deductions: Up to ₹1,50,000 (e.g., investments in PPF, ELSS)
-
House Rent Allowance (HRA)
-
Other applicable deductions
Assuming the taxpayer claims the full ₹1,50,000 under Section 80C and the standard deduction:
-
Gross Income: ₹15,00,000
-
Less: Standard Deduction: ₹50,000
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Less: Section 80C Deductions: ₹1,50,000
-
Net Taxable Income: ₹13,00,000
Tax on Net Taxable Income:
-
₹0 – ₹2,50,000: 0% → ₹0
-
₹2,50,001 – ₹5,00,000: 5% on ₹2,50,000 → ₹12,500
-
₹5,00,001 – ₹10,00,000: 20% on ₹5,00,000 → ₹1,00,000
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₹10,00,001 – ₹13,00,000: 30% on ₹3,00,000 → ₹90,000
Total Tax Before Cess: ₹2,02,500
Add: Health and Education Cess (4%): ₹8,100
Total Tax Payable: ₹2,10,600
Comparison Summary
| Particulars | New Regime | Old Regime |
|---|---|---|
| Gross Income | ₹15,00,000 | ₹15,00,000 |
| Deductions | ₹75,000 | ₹2,00,000 |
| Net Taxable Income | ₹14,25,000 | ₹13,00,000 |
| Total Tax Payable (Including Cess) | ₹97,500 | ₹2,10,600 |
Tax Savings Under New Regime: ₹1,13,100
Conclusion:
In this scenario, the new tax regime results in a significantly lower tax liability compared to the old regime. However, the optimal choice between the two regimes depends on individual circumstances, including the amount of deductions and exemptions one can claim under the old regime.
If you need assistance in calculating your tax liability based on your specific income and deductions, feel free to provide the details, and I can help you with a personalized comparison.
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