New Income Tax Slab, Rates, and Rebate FAQs for FY 2025-26
Published on:
Category: EDUCATION
Author: CS NAWAL KISHOR VERMA
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The Union Budget 2025-26 introduced significant changes to personal income tax, aiming to increase disposable income for the middle class and stimulate economic growth. Below are key insights into the revised tax slabs, rates, and rebates.
1. Who is Exempt from Paying Income Tax?
Under the new tax regime, the tax-free income limit for salaried individuals and pensioners has been increased to ₹12 lakh per annum. With the standard deduction of ₹75,000, individuals earning up to ₹12.75 lakh will pay no tax.
2. Revised Income Tax Slabs for FY 2025-26
| Total Income (₹)Tax Rate | |
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
3. Applicability of the New Tax Regime
- The new tax regime applies to salary and pension income.
- Special incomes such as capital gains, business income, and foreign earnings may have separate tax treatments.
4. Income Tax Return (ITR) Filing Requirements
- Even if no tax is payable, individuals must file an ITR if their income exceeds ₹4 lakh.
- Filing an ITR is essential for loan approvals, visa applications, and claiming tax refunds.
5. Key Benefits of the New Tax Regime
- Higher disposable income due to reduced tax rates.
- Standard deduction of ₹75,000 for salaried individuals.
- Simplified tax structure with fewer deductions.
6. Tax Slabs Under the Old Tax Regime
| Income (₹)Tax RateSurcharge | ||
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,001 - ₹5,00,000 | 5% | Nil |
| ₹5,00,001 - ₹10,00,000 | 20% | Nil |
| ₹10,00,001 - ₹50,00,000 | 30% | Nil |
| ₹50,00,001 - ₹1,00,00,000 | 30% | 10% |
| ₹1,00,00,001 - ₹2,00,00,000 | 30% | 15% |
| ₹2,00,00,001 - ₹5,00,00,000 | 30% | 25% |
| Above ₹5,00,00,000 | 30% | 37% |
7. Deductions Under the New Tax Regime
- Limited deductions apply, such as employer contributions to NPS and EPF.
- Other popular deductions (Section 80C, 80D, and HRA) are available only under the old tax regime.
8. Can Taxpayers Switch Between Old and New Tax Regimes?
- Salaried individuals can switch between tax regimes each year.
- Business owners and professionals can only switch once after opting out of the new regime.
9. Deadline for Filing Updated ITRs
- The deadline for filing updated ITRs has been extended from 2 years to 4 years.
- Delayed filings attract an additional tax of 60-70%, depending on the delay period.
10. Key Takeaways from Budget 2025-26
- Higher tax-free income limit of ₹12 lakh (effectively ₹12.75 lakh with standard deduction).
- Revised tax slabs under the new regime to reduce tax liability.
- Old tax regime remains unchanged, with taxpayers free to choose.
- Extended deadline for updated ITRs to 4 years.