The finance minister Nirmala Sitharaman has made changes in the income tax slabs under the new tax regime in Union Budget 2025. The new income tax slabs under the new tax regime will come into effect from April 1, 2025 for the upcoming financial year 2025-26. The income tax slabs under the new tax regime have completely changed. The proposed income tax slabs under the new tax regime for FY 2025-26 are as follows: Rs 0- Rs 4 lakh Nil tax, Rs 4 lakh and Rs 8 lakh – 5%, Rs 8 lakh and Rs 12 lakh – 10%, Rs 12 lakh and Rs 16 lakh – 15%, Rs 16 lakh and Rs 20 lakh – 20%, Rs 20 lakh and Rs 24 lakh – 25% and above Rs 24 lakh – 30%. The new income tax slabs under new tax regime will allow taxpayers to save up to Rs 1.14 lakh in a financial year. The new tax regime continues to remain the default tax regime.
Apart from making income tax changes, the tax rebate under Section 87A has been proposed to be hiked to Rs 60,000. The proposed hike in tax rebate under Section 87A will ensure that there is zero tax payable on incomes up to Rs 12 lakh. Current income tax laws allow zero tax on net taxable incomes up to Rs 7 lakh. This makes them eligible for current tax rebate of up to Rs 25,000.
The new income tax slabs proposed under new tax regime have hiked the income tax basic exemption limit to Rs 4 lakh from current limit of Rs 3 lakh.
No changes have been proposed in the deductions available under the new tax regime. For the upcoming fiscal year 2025-26, the individual will continue to claim standard deduction of Rs 75,000 from salary income and 14% of basic salary as employer’s contribution to the NPS Tier-I account.
There is no change in the surcharge levied on the income tax liability under the new tax regime for FY 2025-26.
The proposed changes in the new tax regime will make it more attractive for the taxpayers. It is likely that more taxpayers will now opt for the new tax regime going forward.
No major changes have been announced in the old tax regime. However, parents investing in NPS Vatsalya for their children will soon be eligible for deduction under Section 80CCD (1b) of the Income Tax Act. This deduction will be available over and above Rs 1.5 lakh available under Section 80C. This deduction is available for additional investment made in NPS for up to Rs 50,000 under the old tax regime. Further, tax rebate of Rs 12,500 will continue to be available under the old tax regime if the taxable incomes do not exceed Rs 5 lakh.
The main difference between the old and new tax regime is the availability of usual deductions and tax exemptions. The new tax regime does not allow deduction of common deductions such as Section 80C deduction up to Rs 1.5 lakh for specified investments and expenditures, Section 80D deduction up to Rs 25,000/Rs 50,000 for health insurance premium paid and Section 80TTA deduction of up to Rs 10,000 for interest earned from savings accounts of bank and post office, among others.
The income tax slabs applicable under the old tax regime depends on the age of individual. The old tax regime offered multiple basic income exemption limits depending on the age of the taxpayer. For individuals below 60 years of age, the basic income exemption limit is Rs 2.5 lakh. For senior citizens aged 60 years and above but below 80 years, the basic exemption limit is Rs 3 lakh. For super senior citizens aged 80 years and above, the basic exemption limit is Rs 5 lakh.
An individual who wants to opt for the old tax regime now has to specifically choose it while filing income tax return.
An individual taxpayer not having business income is required to choose between the two regimes every financial year. Currently, a taxpayer having business income wanting to continue with the old tax regime in a financial year, will specifically have to opt for it. Once opted, they would have once in a lifetime option to switch to new tax regime. Once new tax regime is opted, they cannot opt for old tax regime again.
Income tax slabs for FY 2025-26 (AY 2026-27), FY 2024-25 (AY 2025-26), FY 2023-24 (AY 2024-25) under the new tax regime
The new income tax slabs under the new tax regime have been proposed for the upcoming fiscal year 2025-26. The changes proposed in the income tax slabs under the new tax regime will benefit taxpayers who struggle to save income tax by making savings and investments. The highest tax rate of 30% is proposed to be applicable on incomes above Rs 24 lakh under the new tax regime as opposed to Rs 15 lakh currently.
Here are the proposed income tax slabs under new tax regime for FY 2025-26 (AY 2026-27)
| Income tax slabs (Rs) | Income tax rate (%) |
| From 0 to 4,00,000 | 0 |
| From 4,00,001 to 8,00,000 | 5 |
| From 8,00,001 to 12,00,000 | 10 |
| From 12,00,001 to 16,00,000 | 15 |
| From 16,00,001 to 20,00,000 | 20 |
| From 20,00,001 to 24,00,000 | 25 |
| From 24,00,001 and above | 30 |
The changes proposed in the new tax regime will further make the new tax regime more attractive vis-à-vis the old tax regime. In February 2023, the changes were announced in the new tax regime to make it more attractive for individual taxpayers. Some of these changes were – the introduction of the standard deduction, raising the basic exemption limit, a hike in tax rebate under Section 87A for taxable income up to Rs 7 lakh and so on. In the July 2024 budget, the government tweaked the income tax slabs under the new tax regime further. The changes in the income tax slabs in July 2024 budget raised the upper limit in two slabs by Rs 1 lakh. The Rs 3 lakh-Rs 6 lakh slab has become Rs 3 lakh-Rs 7 lakh; and the Rs 6 lakh-Rs 9 lakh slab has become Rs 7 lakh-Rs 10 lakh.
Current Income tax slabs under new tax regime for FY 2024-25 (AY 2025-26)
| Income tax slabs (Rs) | Income tax rate (%) |
| From 0 to 3,00,000 | 0 |
| From 3,00,001 to 7,00,000 | 5 |
| From 7,00,001 to 10,00,000 | 10 |
| From 10,00,001 to 12,00,000 | 15 |
| From 12,00,001 to 15,00,000 | 20 |
| From 15,00,001 and above | 30 |
Changes made in the new tax regime in Budget 2024
Apart from tweaking income tax slabs, some changes were also made in the new tax regime. Changes announced in the new tax regime are as follows:
a) Hike of standard deduction limit to Rs 75,000 from Rs 50,000 – an increase of Rs 25,000. This standard deduction is available to those individual taxpayers who are having income from salary or pension. No change announced in standard deduction limit in Budget 2025
b) Hike in standard deduction limit for family pensioners to Rs 25,000 from Rs 15,000 – an increase of Rs 10,000. This standard deduction is available to those individual taxpayers who are receiving family pensions.
c) Hike in deduction available on the employer’s contribution to the NPS account to 14% from 10%. This hike in deduction will help the employees to save more tax in the new tax regime.
Features of new tax regime
Following are the features of the new tax regime for individual taxpayers:
a) New tax regime is the default tax regime. An individual has option to opt for the old tax regime in any financial year, provided there is no business income
b) Currently, basic exemption limit of Rs 3 lakh for all individual taxpayers irrespective of their age. From April 1, 2025 (FY 2025-26), the basic exemption limit will be hiked to Rs 4 lakh – an increase of Rs 1 lakh
c) Tax rebate under Section 87A makes zero tax payable for taxable incomes up to Rs 7 lakh currently. From April 1, 2025, tax rebate under Section 87A will be applicable for taxable incomes up to Rs 12 lakh, making them pay zero till income up to Rs 12 lakh.
d) Highest surcharge rate for those earning above Rs 2 crore is 25%. This remains same after Budget 2025.
For those filing income tax return for previous financial year 2023-24, the income tax slabs under the new tax regime are different. Following are the income tax slabs under new tax regime for FY 2023-24 (AY 2024-25) that will be used for ITR filing:
| Income tax slabs (Rs) | Income tax rate (%) |
| From 0 to 3,00,000 | 0 |
| From 3,00,001 to 6,00,000 | 5 |
| From 6,00,001 to 9,00,000 | 10 |
| From 9,00,001 to 12,00,000 | 15 |
| From 12,00,001 to 15,00,000 | 20 |
| From 15,00,001 and above | 30 |
Income tax slab rates for FY 2024-25 (AY 2025-26), FY 2023-24 (AY2024-25), FY 2022-23 (AY 2023-24), FY 2021-22 (AY 2022-23) under old tax regime
There are no changes in the income tax slabs of the old tax regime in the July Budget 2024. Remember, income tax slabs under the new tax regime are tweaked. It will mean that anyone choosing the old tax regime for the current financial year 2024-25 (April 1, 2024, and March 31, 2025) will calculate the income tax payable at the same rates as in FY 2023-24 (April 1, 2023, and March 31, 2024).
Under the old tax regime, income tax slabs applicable to an individual depend on the age of an individual in a particular financial year. Hence, the basic exemption limit will also be different for individuals.
For an individual below 60 years of age, the basic exemption limit is of Rs 2.5 lakh. For senior citizens (aged 60 years and above but below 80 years) the basic income exemption limit is of Rs 3 lakh. For super senior citizens (aged 80 years and above), the basic income exemption limit is Rs 5 lakh. For non-resident individuals, the basic income exemption limit is of Rs 2.5 lakh irrespective of age.
Given below are the income tax rates for FY 2024-25 (AY 2025-26), FY 2023-24 (AY 2024-25), FY 2022-23 (AY 2023-24) and FY 2021-22 (AY 2022-23) under the old tax regime.
| Income tax slabs for individuals under old tax regime | |
| Income tax slabs (Rs) | Income tax rates (%) |
| From 0 to 2,50,000 | 0 |
| From 2,50,001 to 5,00,000 | 5 |
| From 5,00,001 to 10,00,000 | 20 |
| From 10,00,001 and above | 30 |
| Income tax slabs for senior citizens under old tax regime | |
| Income tax slabs (Rs) | Income tax rates (%) |
| From 0 to 3,00,000 | 0 |
| From 3,0,001 to 5,00,000 | 5 |
| From 5,00,001 to 10,00,000 | 20 |
| From 10,00,001 and above | 30 |
| Income tax slabs for super senior citizens under old tax regime | |
| Income tax slabs (Rs) | Income tax rates (%) |
| From 0 to 5,00,000 | 0 |
| From 5,00,001 to 10,00,000 | 20 |
| From 10,00,001 and above | 30 |
Comparison of income tax slabs under the old and new tax regime for FY 2024-25 (AY 2025-26)
| Taxable Income | Old Tax Regime | New Tax Regime |
| 0 to Rs 2,50,000 | 0% | 0% |
| Rs 2,50,001 to Rs 3,00,000 | 5% | 0% |
| Rs 3,00,001 to Rs 5,00,000 | 5% | 5% |
| Rs 5,00,001 to Rs 7,00,000 | 20% | 5% |
| Rs 7,00,001 to Rs 10,00,000 | 20% | 10% |
| Rs10,00,001 to Rs12,00,000 | 30% | 15% |
| Rs 12,00,001 to Rs 15,00,000 | 30% | 20% |
| Rs15,00,001 and above | 30% | 30% |
How to calculate income tax payable under new tax regime
For those salaried individuals who are continuing with the new tax regime for the current financial year, 2024-25, should know how to calculate income tax payable. It is important to remember that income tax slabs have been tweaked in new tax regime. Hence, knowing the correct way to calculate is important.
Further, for FY 2024-25, deductions available under new tax regime for a salaried individual have also been tweaked. A salaried individual can claim – i) Standard deduction of Rs 75,000 from salary and pension income instead of Rs 50,000 earlier, and ii) Section 80CCD (2) deduction for employer’s contribution to employee’s NPS account. This deduction can be claimed for up to 14% of the basic salary of an employee instead of 10% earlier.
Here is an example of how to calculate income tax payable under the new tax regime.
Suppose an individual’s gross total income is Rs 20 lakh in FY 2024-25. He/she is eligible for standard deduction of Rs 75,000 in the current financial year and employer has deposited Rs 2 lakh in his/her Tier-I NPS account. This makes him eligible to claim deduction under section 80CCD (2) of the Income-tax Act.
| Particulars | Amount (In Rs) |
| Gross total income | 20,00,000 |
| Standard deduction from salary/pension | (75,000) |
| Deduction under section 80CCD (2) | (2,00,000) |
| Net taxable income | 17,25,000 |
Hence, the net taxable income on which income tax payable is to be calculated will be Rs 17.25 lakh (Rs 20 lakh minus Rs 2.75 lakh).
Under the new income tax regime, income between 0 to Rs 3 lakh is exempted from tax. Hence, no tax will be payable on this income. After deducting income of Rs 3 lakh from Rs 17.25 lakh the income left which is still chargeable to tax is Rs 14.25 lakh.
The next income tax slab is Rs 3,00,001 and Rs 7,00,000. Thus, out of taxable income of Rs 14.25 lakh, Rs 4 lakh (Rs 7 lakh minus Rs 3 lakh) will be taxed at 5%. The tax payable here will be Rs 20,000. After this, the income left to be taxed is Rs 10.25 lakh (Rs 14.25 lakh minus Rs 4 lakh).
The next income tax slab is Rs 7,00,001 and Rs 10,00,000. Out of taxable income of Rs 10.25 lakh, the taxable income of Rs 3 lakh (Rs 10 lakh minus Rs 7 lakh) will be taxed at 10%. The tax payable here will be Rs 30,000. After this, the income left to be taxed will be Rs 7.25 lakh.
The next income tax slab is Rs 10,00,001 and Rs 12,00,000. Out of the balance income of Rs 7.25 lakh, Rs 2 lakh will be taxed at 15%. The tax payable under this slab will be Rs 30,000. After this income left for chargeable under the tax will be Rs 5.25 lakh.
The next income tax slab is Rs 12,00,001 and Rs 15,00,000. Here out of the taxable income of Rs 5.25 lakh, Rs 3 lakh (Rs 15 lakh minus Rs 12 lakh) will be taxed at 20%. The tax payable amount here will be Rs 60,000. After this, the income left to be taxed is Rs 2.25 lakh.
The final income tax slab is for incomes above Rs 15 lakh. The balance taxable income of Rs 2.25 lakh will be taxed at 30%. The tax payable here will be Rs 67,500.
The total tax payable by an individual will be Rs 2,07,500. In this tax amount, the cess at 4% will be added to this amount for final tax amount payable.
| Particulars | Income (Rs) | Tax amount (Rs) |
| Net taxable income | 17,25,000 | – |
| Income exempt up to Rs 3 lakh | (3,00,000) | 0 |
| Income which is still chargeable to tax (Rs 17.25 lakh – 3 lakh) | 14,25,000 | – |
| Income tax slab of Rs 3 lakh and up to Rs 7 lakh | (4,00,000) | @ 5% = 20,000 |
| Income which is still chargeable to tax (Rs 14.25 lakh – 4 lakh) | 10,25,000 | – |
| Income tax slab of Rs 7 lakh up to Rs 10 lakh | (3,00,000) | @ 10% = 30,000 |
| Income which is still chargeable to tax (Rs 10.25 lakh -3 lakh) | 7,25,000 | – |
| Income tax slab of Rs 10 lakh up to Rs 12 lakh | (2,00,000) | @15% = 30,000 |
| Income which is still chargeable to tax (Rs 7.25 lakh – 2 lakh) | 5,25,000 | – |
| Income tax slab of Rs 12 lakh up to Rs 15 lakh | (3,00,000) | @ 20% = 60,000 |
| Income which is still chargeable to tax (Rs 5.25 lakh-3 lakh) | 2,25,000 | – |
| Income tax slab of above Rs 15 lakh | (2,25,000) | @30% = 67,500 |
| Total income tax liability | – | 2,07,500 |
| Cess at 4% on total income tax payable (i.e. on Rs 2,07,500) | – | 8,300 |
| Final income tax liability (inclusive of cess) | – | 2,15,800 |
The final tax payable on gross income of Rs 20 lakh is Rs 2,15,800, after claiming deductions of Rs 2.75 lakh. The surcharge is also applicable if the income is above Rs 50 lakh.
How to calculate income tax liability under old tax regime
The July budget 2024 has kept the income tax slabs under the old tax regime unchanged. If a salaried taxpayer opts for the old tax regime in the current financial year 2024-25, then one can claim various deductions and tax exemptions. The new tax regime (which is a default tax regime) does not allow claiming various deductions and exemptions except the specified two.
By claiming deductions such as Section 80C, Section 80D, HRA tax exemption etc. one can reduce their gross taxable income and thereby reducing income tax liability.
Remember, the income tax slabs under the old tax regime has different income tax slabs depending on the age of individual in a financial year.
Here is an example on how to calculate income tax payable under the old tax regime.
Suppose an individual aged below 60 years has a gross total income of Rs 17 lakh for the current financial year, i.e., FY 2024-25 (April 1, 2024-March 31, 2025). An individual has decided to opt for the old tax regime for the current financial year. Further, he/she is eligible to claim following tax exemption and deductions – section 80C for up to Rs 1.5 lakh, section 80CCD(1b) for NPS investment of Rs 50,000, section 80D of Rs 25,000 for medical insurance premium paid and section 80TTA of Rs 10,000 on savings account interest earned.
| Particulars | Amount (in Rs) |
| Gross total income | 17,00,000 |
| Section 80C | (1,50,000) |
| Section 80 CCD(1b) NPS investment | (50,000) |
| Section 80D – medical insurance premium | (25,000) |
| Section 80TTA | (10,000) |
| Net taxable income | 14,65,000 |
After deducting the deductions from the gross total income, one arrives at the net taxable income of Rs 14,65,000. The tax payable will be calculated on the net taxable income.
As per the income tax slab rates table, the first Rs 2.5 lakh from net taxable income will be exempted from tax. This is because there is no tax on income up to Rs 2.5 lakh as per current income tax slabs in the old tax regime. Post this, income left on which tax has to be calculated is Rs 12,15,000 (14,65,000-2,50,000). The second slab in the income tax slab table is Rs 2.5 lakh and Rs 5 lakh which is taxed at Rs 5%. This means that out of Rs 12,15,000, then next Rs 2,50,000 will be taxed at 5%. The tax amount will be Rs 12,500.
Now the income left which is still chargeable to tax is Rs 9,65,000. The third slab in the income tax slab table is Rs 5 lakh and Rs 10 lakh, taxed at 20%. This means that out Rs 9,65,000, Rs 5,00,000 will be taxed at 20%. The tax payable here will be Rs 1,00,000.
The balance income on which tax has to be calculated is Rs 4,65,000. The tax amount on this balance income (Rs 14,65,000 minus Rs 10,00,000) will be calculated on the basis of the last slab, i.e., above Rs 10 lakh at the rate of 30%. The tax payable amount comes out to be Rs 1,39,500.
Hence, the total tax payable by an individual will be Rs 2,52,000 (Rs 12,500 + 1,00,000+ 1,39,500).
| Particulars | Income (Rs) | Tax amount (Rs) |
| Net taxable income | 14,65,000 | – |
| Income exempt up to Rs 2,50,000 | (2,50,000) | 0 |
| Income which is still chargeable to tax (Rs 14,65,000 – 2,50,000) | 12,15,000 | – |
| Income tax slab of Rs 2.5 lakh and up to Rs 5 lakh | (2,50,000) | @ 5% =12,500 |
| Income which is still chargeable to tax (Rs 12,15,000 – 2,50,000) | 9,65,000 | – |
| Income tax slab of Rs 5 lakh up to Rs 10 lakh | (5,00,000) | @20% = 1,00,000 |
| Income which is still chargeable to tax (Rs 9,65,000 – 5,00,000) | 4,65,000 | – |
| Income tax slab of above Rs 10 lakh | (4,65,000) | @ 30% =1,39,500 |
| Total income tax liability | – | 2,52,000 |
| Cess at 4% on total income tax payable (i.e. on Rs 2,52,000) | – | 10,080 |
| Final income tax liability (inclusive of cess) | – | 2,62,080 |
Do note that cess and surcharge are also levied on the income tax payable. Cess is levied at the rate of 4% and surcharge is levied if the total income exceeds Rs 50 lakh.
From the example above, the cess amount is Rs 10,080. The surcharge will not be applicable as net taxable income does not exceed Rs 50 lakh. The final tax amount payable by individual is Rs 2,62,080.
How to know which income tax slab you fall in
Individuals, not having business incomes, are required to choose between the two tax regimes in every financial year. Furthermore, an individual needs to know the income tax slabs in which their income will fall. These two factors will help an individual to determine which income tax regime is more beneficial to them.
To know the income tax slabs and rates applicable to your income under any income tax regime, one must first know the taxable income on which tax has to be calculated. If an individual continues with old tax regime, then he/she is eligible to claim tax exemption (such as House Rent Allowance exemption, Leave Travel Allowance exemption, standard deduction) and deductions under sections 80C to 80U, as eligible for. After claiming and deducting the tax exemptions and deductions that an individual is eligible for, he/she arrives at the net taxable income on which income tax payable is calculated.
For example, your gross total income from all sources is Rs 12 lakh and you are eligible to claim deduction of Rs 2.10 lakh under sections 80C, 80TTA, 80CCD(1b). The taxable income on which you have to calculate tax will be Rs 9.9 lakh (Rs 12 lakh – Rs 2.10 lakh). Your income tax slab in the old tax regime will be between Rs 5 lakh and Rs 10 lakh. The tax rate is the 20%.
However, the income tax slabs and income tax rules under the new tax regime have been revised in the July budget 2024. From April 1, 2024, the new tax regime allows standard deduction of Rs 75,000 from salary and pension income and Section 80CCD (2) deduction up to 14% on basic salary for employer’s contribution to the employee’s Tier-I NPS account.
From the example above, after claiming deduction, the taxable income is, say, Rs 9.9 lakh (Gross taxable income of Rs 12 lakh minus Rs 2.10 lakh). The net taxable income of Rs 9.9 lakh falls under the revised income tax slab of Rs 7,00,001 and Rs 10,00,000. This will be taxed at 10%.
Source: Economic Times