For FY 2025-26 (AY 2026-27), India operates two parallel tax regimes — the new tax regime (default) and the old tax regime (optional). Additionally, the Parliament has passed the new Income Tax Act 2025 which replaces the Income Tax Act 1961 from FY 2026-27. This guide covers all current slab rates and what to expect going forward.
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1. New Tax Regime Slab Rates — FY 2025-26
The new regime is the default for FY 2025-26. Standard deduction: ₹75,000 for salaried and pensioners.
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹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% |
Section 87A rebate under new regime: Income up to ₹7 lakh is effectively tax-free after rebate (max rebate ₹25,000).
2. Old Tax Regime Slabs (Optional for FY 2025-26)
| Income Slab (Below 60 years) | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Old regime allows all deductions — 80C (₹1.5L), 80D, HRA, home loan interest, NPS, standard deduction (₹50,000). 87A rebate: income up to ₹5 lakh is effectively tax-free.
3. Senior Citizen and Super Senior Citizen Slabs (Old Regime)
| Category | Basic Exemption | Slabs |
|---|---|---|
| Senior Citizens (60–79 years) | ₹3,00,000 | 3L–5L: 5%, 5L–10L: 20%, Above 10L: 30% |
| Super Senior Citizens (80+ years) | ₹5,00,000 | 5L–10L: 20%, Above 10L: 30% |
4. Surcharge on Income Tax
| Income Range | Surcharge (Old Regime) | Surcharge (New Regime) |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| ₹50L – ₹1 crore | 10% | 10% |
| ₹1 crore – ₹2 crore | 15% | 15% |
| ₹2 crore – ₹5 crore | 25% | 25% |
| Above ₹5 crore | 37% (capped at 15% for new regime) | 25% |
4% Health and Education Cess is applied on income tax + surcharge for all taxpayers.
5. Rebate Under Section 87A
| Regime | Income Limit | Rebate | Effective Result |
|---|---|---|---|
| New Tax Regime | Up to ₹7,00,000 | Max ₹25,000 | Zero tax up to ₹7L |
| Old Tax Regime | Up to ₹5,00,000 | Max ₹12,500 | Zero tax up to ₹5L |
6. New vs Old Regime — Which Saves More for FY 2025-26?
The break-even point: if your total deductions under old regime exceed approximately ₹3.75 lakh (including ₹75K standard deduction under new regime adjustment), old regime saves more tax. Below that threshold, new regime is more beneficial.
| Annual Income | New Regime Tax | Old Regime (max deductions) | Better |
|---|---|---|---|
| ₹7,00,000 | Nil (87A) | Nil (87A) | Both equal |
| ₹10,00,000 | ~₹54,600 | ~₹31,200 (with deductions) | Old regime |
| ₹15,00,000 | ~₹1,56,000 | ~₹1,17,000 (with deductions) | Old regime |
| ₹20,00,000 | ~₹2,96,400 | ~₹2,81,100 (max deductions) | Old (marginal) |
7. New Income Tax Act 2025 — What Changes from FY 2026-27
The new Income Tax Act 2025 will replace the Income Tax Act 1961 from FY 2026-27 (AY 2027-28) onwards. Key points:
- No change in tax rates or slabs — the new Act primarily simplifies and reorganises the existing law
- Section numbers change — for example, what is currently Section 80C will have a new reference number
- Language simplified — complex provisos and cross-references are rewritten in plain English
- Tax year concept — the new Act uses "tax year" instead of "financial year" and "assessment year" terminology
- Deductions retained — equivalent provisions for PPF, ELSS, LIC, HRA, home loan interest are retained
- For FY 2025-26 filing — the existing Income Tax Act 1961 applies. File your return as usual.
Disclaimer: This article is for general informational and educational purposes only. It represents our professional views as Chartered Accountants. This content should not be construed as legal or tax advice. Tax laws are subject to change with each Union Budget. For advice specific to your situation, please consult our experts directly.
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