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

Since India has a progressive income tax structure, higher income levels result in higher tax rates. In India, the appropriate rates for various income categories are specified by the Income Tax Slabs, which varies according to the taxpayer’s age, residential status, and type. The old and modern tax regimes are the two types of tax regimes. Depending on government announcements, the appropriate income tax slabs and rates may vary every fiscal year. The income tax slabs that apply for the current fiscal year are discussed in this article.

2025 Budget Update

Up to ₹12.75 lakh in annual income is exempt from income tax!
The government has given the middle class significant tax relief by increasing the Section 87A rebate limit from ₹7 lakh to ₹12 lakh. In addition, salaried people are eligible for a ₹75,000 standard deduction, which eliminates taxes on incomes up to ₹12.75 lakh.

Under the new tax system, the new slab structure:

• ₹0–₹4 lakh → Tax-free
• INR 4 lakh to INR 8 lakh → 5%
• INR 8 lakh to INR 12 lakh → 10%
• INR 12 lakh to INR 16 lakh → 15%
• INR 16 lakh to INR 20 lakh → 20%
• INR 20 lakh to INR 24 lakh → 25%
• INR 24 lakh & above → 30%

Extended period for ITR-U (updated returns) filing:

• Instead of two years, taxpayers now have four years to update their income tax returns
• These modifications will take effect on April 1, 2025, which is for FY 2025–2026.

What is Income Tax Slab?

Depending on which income tax slab they are in, Indian taxpayers must pay income tax. Different income categories with varying income tax rates make up the income tax slab. The tax rates rise in tandem with income. A fair tax system in India was made possible by the introduction of the Income Tax Slabs. The taxpayer must complete the ITR filing by the deadline based on these income tax slabs. The budget announcement is followed when making adjustments to the income tax slab. Under the previous regime, Income Tax Slabs were separated into three groups based on the age of the individual; however, under the current regime, there is no such classification.

The old and new regimes of India’s direct tax system are likewise separated. When submitting their ITR, taxpayers can select the option that will benefit them the most.

FY 2025–2026 Income Tax Slab Under the New Regime (AY 2026-27)

The table below displays the updated income tax slabs under the new regime, as per Budget 2025:

Budget 2025: Raised Tax Refund Limits

The income tax refund cap has been raised to Rs. 12 lakhs in accordance with the Budget 2025. Under the new tax system, this cap was raised from Rs. 5 lakhs to Rs. 7 lakhs in the budget for 2024.

FY 2024-25 Income Tax Slab (AY 2025-26)

New Regime (FY 2024-25)

Old Regime (FY 2024-25)

A Comparison of the Old and New Tax Regimes’ Tax Rates

The Old and New Tax Regimes

There are two types of the Indian direct tax system: the old regime and the current regime. The perks and exemptions offered by the two systems differ.

The New Tax System

Compared to the previous tax system, the new one offers lower tax rates for higher earners. It is voluntary and enables you to reduce your tax liability under specific circumstances.

Therefore, you would not be eligible for the majority of the deductions and exemptions granted under the Income Tax Act of 1961 if you decided to compute your taxes under the new tax regime.

However, in order to make the new tax regime more appealing, the administration proposed a few significant modifications in the Budgets 2023, 2024, and 2025:

Previous Tax System

In India, the income tax slabs and calculation system that were in place prior to the implementation of the new tax regime are referred to as the “old tax regime.” To lower their taxable income under the previous tax system, people might choose to take advantage of a number of tax exemptions and deductions. More than 70 deductions and exclusions are available under the Old Tax Regime for claims such as Section 80C, HRA, LTA, and others. The current tax regime is another name for this one. The Income Tax Slabs rate under the previous tax scheme has not changed.

Distinctive Attributes of the Old Tax Regime

1. Elevated Tax Rates

The old tax regime imposes relatively higher tax rates across different income brackets, leading to increased tax liability for certain income groups.

2. Comprehensive Deductions and Exemptions

One of the primary benefits of the old tax regime is the wide range of deductions and exemptions available, allowing taxpayers to reduce their taxable income significantly. Income Tax Slabs

Key Deductions:

• Section 80C: Up to ₹1.5 lakh for investments in instruments like ELSS, PPF, and life insurance premiums.
• Section 80D: Deduction for health insurance premiums covering individuals and family members.
• Standard Deduction: A flat ₹50,000 reduction for salaried individuals and pensioners

Common Exemptions:

• House Rent Allowance (HRA): Applicable for individuals living in rented accommodations.
• Leave Travel Allowance (LTA): Exemption for travel expenses incurred during vacations within India.
• Other Allowances: Includes exemptions for transportation costs and meal vouchers provided by employers.

3. Best Suited For:

The old tax regime is ideal for individuals with significant eligible deductions and exemptions, enabling substantial tax savings despite the higher tax rates.

Features of the New Tax Regime

Reduced Tax Rates:

provides lower tax rates for certain income tax slabs:

No Exemptions or Deductions:

The majority of exemptions and deductions, such as 80C, HRA, and LTA, are not available.
Standard deduction (₹75,000, as of Budget 2024) is permitted.

Streamlined Adherence:

No need to keep copious records for deductions or exemptions.

Increased Take-Home Pay:

advantageous for people without sizable tax-saving investments.

Appropriate for Specific Taxpayers:

Perfect for people who have few or no deductions and investments.

Taxpayers have the option to choose between the old and new regimes:

• based on which one best suits their needs.
• The Old Regime works well for people who have large deductions or investments.
• For people who favor simplicity or have few alternatives for tax savings, the New Regime is preferable.

Using the Old vs. New tax slab regime calculator, you can also determine your tax liability under both regimes and choose the one that best suits your needs.

You can obtain guidance from our tax specialists and finish completing your income tax return online with the assistance of a certified public accountant if you are unsure whether tax regime is appropriate for you or find ITR filing difficult. Make a CA online reservation right now!

FY 2024-25 Income Tax Slab Rates (AY 2025-26) Considering Residential Status

Individual and HUF resident income tax rates

What Does the Revised New Tax Regime’s Surcharge Amount Mean?

For taxpayers making more than Rs 5 crores, the surcharge rate has been lowered from 37% to 25% under the updated new tax regime.

If an assesses total income surpasses certain thresholds, a surcharge is applied to the amount of income tax at the following rates.

Rate of Income Tax for Individuals Who Are Not Residents

AOP/BOI/Artificial Judicial Person Income Tax Rate

Slabs of taxes for domestic companies

Take note:

• When a company’s regular tax burden is less than 15% of book profit, it must pay 15% of book profit in Minimum Alternate Tax (MAT), plus a surcharge and any relevant Health and Education Cess.
• MAT is payable at 9% (plus cess and surcharge as applicable) to a company that is a part of an International Financial Services Center and generates all of its revenue in convertible foreign currency.
• Companies that want to use Sections 115BAA and 115BAB for special rate taxation are free from paying MAT.
• Section 80IA, 80IAB, 80IAC, 80IB, and other deductions are not available to companies that choose the special rate of taxation under 115BAA or 115BAB, with the exception of deductions under 80JJAA and 80M.

Foreign Company of Income Tax Rate

Assessment Year 2024–2025

Assessment Year 2025-26

Include:

(a) Surcharge: If total income exceeds one crore rupees but not ten crore rupees, the amount of income tax will be raised by a surcharge at the rate of 2% of such tax; if total income exceeds ten crore rupees, the rate will be 5% of such tax. However, there will be a small reduction in the surcharge, which will look like this:

1)The entire amount payable as income-tax and surcharge on total income of one crore rupees cannot be greater than the amount of income that surpasses one crore rupees in cases where income exceeds one crore rupees but does not exceed ten crore rupees.( ii) In the event that income surpasses ten crore rupees, the total quantum owed in income duty and cargo can not be lesser than the whole quantum owed in income duty on the ten crore rupees of income.
(b) Health and Education Cess : The health and education cess, which is reckoned at a rate of 4 of the applicable income duty and cargo, will be added to the quantum of income duty and the applicable cargo.

Alternate Minimum Tax (MAT)

If a foreign company’s tax liability on its overall income, calculated in accordance with the Act’s regular requirements, is less than 15% of its “book profit,” it must pay Minimum Alternate Tax. In this scenario, the “book profit” is considered the company’s revenue, and 15% of that profit is subject to taxation.

However, international corporations who choose to use the presumptive taxation scheme of Section 44B, Section 44BB, Section 44BBA, or Section 44BBB, or that do not have a permanent establishment (PE) in India, are exempt from the MAT’s rules.

Income Tax Slabs for Senior and Super Senior Citizens

Senior and Super Senior Citizen Income Tax Slabs (New Tax Regime)

• The maximum amount free from income tax is Rs. 3 lakh.
• 10% income tax is applied as a surcharge if total income exceeds Rs. 50 lakh and up to Rs. 1 crore.
• If total income above Rs. 1 crore, a 15% income tax surcharge is applicable.

Old Tax Regime Income Tax Slabs for Senior Citizens

Super Senior Citizens’ Income Tax Slabs (Old Tax Regime)

Criteria for Selecting the Updated Tax System

Hindu Undivided Families (HUFs) and individuals must pay taxes under the new tax system for the assessment year 2024–2025 unless they choose to use the previous regime while submitting their income tax returns by the deadline. The following criteria are used to determine total income under the new tax regime: Income Tax Slabs

Exemptions and Deductions Not Permitted:

• Chapter VI-A Deductions: With the exception of those permitted by Sections 80CCD and 80JJAA, all deductions under Chapter VI-A are prohibited.
• Section 35, Section 35AD, and Section 35CCC: These sections prohibit deductions.
• Section 57, clause (iia): This deduction is not allowed.
• Interest on borrowed: capital is not deductible under Section 24(b).
• Sections 10, 10AA, and 16 Specific Clauses: The exemptions provided by clauses (5), (13A), (14), (17), and (32) do not apply.
• Depreciation and Associated Deductions: Sections 32(1), 32AD, 33AB, and 33ABA prohibit deductions.

Additional Requirements for Income Calculation:

• Losses from prior assessment years that resulted from prohibited deductions or losses to real estate cannot be made up.
• No allowances or perquisite-related exclusions or deductions are taken into account.
• Section 32’s clause (iia) prohibits the claim of additional depreciation.
• The removal of several exclusions and deductions under the new regime streamlines tax computations, although compliance must be carefully considered.

Income Tax Surcharge

Additional taxes are imposed on top of the current tax rates when an individual’s income surpasses a specific threshold. High-income earners are the main target of this additional tax burden. Income Tax Slabs

The following is the structure of the surcharge rates:

• 10% income tax is due if total income exceeds Rs. 50 lakh but falls below Rs. 1 crore.
• 15% income tax is due if total income exceeds Rs. 1 crore but falls below Rs. 2 crore.
• 25% income tax is due if total income exceeds Rs. 2 crore but falls below Rs. 5 crore.
• If total income surpasses Rs. 5 crore, 37% of income tax is due.

It’s crucial to keep in mind that Budget 2023 reduced the highest surcharge rate from 37% to 25% in order to make the new tax system effective on April 1, 2023.

However, certain forms of income are exempt from the maximum surcharge rates of 25% or 37%. Dividend income and capital gains are subject to Sections 111A (Short Term Capital Gain on Shares), 112A (Long Term Capital Gain on Shares), and 115AD (Tax on the income of Foreign Institutional Investors). 15% is the highest surcharge rate that can be applied to the taxes owed on certain incomes. Income Tax Slabs

Additionally, an Association of Persons (AOP) composed solely of companies is only permitted to charge a 15% fee.

Which deductions and exemptions are not available under the new tax regime?

Of the 100 exemptions available under the new regime, almost 70 have been eliminated in the 2020 budget. Some of the most significant exemptions and deductions that would be unavailable if the new tax regime slab is used for tax computation are as follows:

1. Allowance for House Rent under Section 10 (13A)
2. Section 10: Leave Travel Allowance (5)
3. Section 10(14) Allowances Food coupons and other tax-free benefits and allowances
4. deductions under Sections 80C, 80D, 80TTA, and other provisions of Chapter VI A of the Income Tax Act.
5. deduction under Sections 24(b) and 80EEA for interest paid on home loans for privately owned real estate.

Which deductions and exemptions are permitted under the new tax regime?

The proposed tax system would allow for the following exemptions and deductions:

• Under Section 80CCD (2), your employer may contribute up to 10% of your salary to the NPS (14% if you work for the Central Government).
• If the dwelling property is rented out, the standard deduction is 30% of the net rental income.
• Interest paid on a home loan may be subtracted from the rental income received from the property. Nevertheless, any other source of income cannot be used to offset a loss from the House Property head.
• Employees of Divyang will be eligible for a transport allowance exemption to cover their regular travel costs from work to home.
• In order to fulfill an official responsibility, the cost of the conveyance will be covered by the conveyance allowance.
• Allowances will be given to employees to cover the cost of their transfer or trip expenses.
• In the event that he or she is absent from their regular place of employment, a daily payment is given for everyday costs.

What are the pros and disadvantages of choosing the new or old tax regime?

The numerous advantages and drawbacks of both the previous and current tax regimes include

Important Things to Consider When Choosing the New Tax Regime

• Easier Tax Submission: The majority of deductions and exemptions are eliminated under the new regime, which greatly simplifies the tax filing process. For people who find the previous regime difficult and time-consuming, this may be the best option.
• Reduced Tax Rates: Generally speaking, the new tax system offers reduced tax rates when compared to the previous one, particularly for those earning up to Rs. 7 lakhs. Increased disposable money may result from this.
• Tax Rebate: Under the new system, anyone earning up to Rs. 7 lakhs are eligible for a full tax refund, which essentially means they pay no taxes.
• Enhanced Liquidity: The new regime can free up your disposable income for other financial objectives by doing away with the necessity for tax-saving investments.

Limitations on Deductions and Exemptions:

• By sacrificing a number of important exemptions and deductions : such as HRA, LTA, medical insurance, educational costs, etc., you may raise your taxable income.
• Lack of Planning Flexibility: You are unable to deliberately reduce your tax obligation through investments and expenses if you do not have deductions.
• Higher Income-Based Tax Rates: The tax rates under the new regime may be greater than those under the previous one for people whose income exceeds Rs. 10 lakhs, particularly when surcharges are applied for income over Rs. 5 crores.
• Few Options for Long-Term Investors: If you depend on tax-saving tools to build wealth over the long term, the new system might not be the best option because you will lose out on their advantages.

Extra Points:

• Each year when you file your taxes, you have the option to choose between the old and new regimes.
• Before choosing, carefully weigh your tax obligations under the two regimes.
• This is when tools like tax calculators come in handy.
• When selecting a regime, take your future investment and income growth goals into account.
• For individualized advice based on your unique financial circumstances, speak with a tax advisor.

How Does the Old Tax Regime Affect Income Tax Liability Calculation?

Tax2win’s Income Tax Calculator can be used to determine your income tax liability for FY 2024–2025 under the previous tax regime.

Step 1: Go to the homepage of Tax2win.
Step 2: Choose Tools > Income Tax Calculator from the top menu.
Step 3: Enter your name, email address, birthdate, and occupation on the following page, then click “Next.”
Step 4: Enter the specifics of your earnings from various sources.
Step 5: Enter the information about other sources of income, such as interest from savings accounts and FDs. Click “Next” now.
Step 6: Enter investment deduction information, including section 80C, 80D, 80E, and other deductions. Click Calculate now.        Step 7: You may see your tax liability on the next page, taking into account all of the deductions under the previous and current regimes. Income Tax Slabs

You may easily compare the tax liabilities of the old and new regimes and choose the one that will benefit you the most if you are unsure which regime to choose. Income Tax Slabs

An illustration of how to compute income tax using income tax slabs.

Let’s examine how Pooja, a paid worker earning Rs. 8,50,000 a year, determines her income tax slabs. Pooja has Rs. 1,50,000 in deductions under section 80C.

To begin, Pooja determines her gross taxable income. Therefore, her total income of Rs. 8,50,000 less her deductions of Rs. 1,50,000 equals Rs. 7,00,000.

Let’s examine the Income Tax Slabs now. In India, there are three tax slabs:

0% tax up to Rs. 5,00,000
20% tax on Rs. 5,00,001 to Rs. 10,000,000.
30% tax on amounts over Rs. 10,000,000.

Pooja’s tax rate is 20% because her income is between Rs. 5,00,001 and Rs. 10,00,000.Applying the duty rate( 20) to the income in this order( Rs. to Rs.) yields the duty quantum. thus, Pooja owes Rs. 40,000 in levies under this band.

The cargo now. Since Pooja’s income is below Rs. 50 lakhs and the cargo is applied to inflows over that quantum, she shouldn’t worry.

Pooja owes Rs. 40,000 in total income duty for the financial time 2023 – 2024. In a nutshell, it’s how she determines her duty liability!

To help you choose which tax regime is best for you, Tax2win’s Old vs. New Tax Regime Calculator gives you all the calculations and a thorough comparison of how much your taxability will be under the old and new regimes. However, it might be difficult and time-consuming to file your own ITR. Furthermore, it’s normal to be ignorant of some significant deductions that are accessible to you. Therefore, hiring an online certified public accountant (CA) is the best approach to file an ITR because they can lower your tax liability in addition to assisting you with the ITR filing process.