Income Tax Guide — FY 2025–26 (India)
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Overview
India's income tax system offers two regimes for individuals, HUFs, and certain assessees: the old tax regime (with extensive deductions/exemptions) and the new tax regime (simplified slabs with limited deductions).
The new regime became default in FY 2024-25 and continues for FY 2025-26, promoting compliance ease but reducing tax-saving options.
Key highlights for FY 2025-26:
- New Regime: Basic exemption limit ₹4,00,000 (from ₹3,00,000).
- New Regime: new 25% slab (₹20–24L); 30% from ₹24L (vs ₹15L)
- New Regime: Rebate: ₹60,000 vs ₹25,000 prior.
- Effective tax-free income:
- Up to ₹12,00,000 under the new tax regime.
- Up to ₹5,00,000 under the old tax regime.
- Standard deduction for salaried individuals increased to ₹75,000 (applicable in both regimes)
- Focus mainly on salaried individuals; tax rates differ for companies, firms, and other entities.
- Health & Education Cess: 4% on income tax + surcharge.
Tax Regimes
| Regime | Key Features | Best For |
|---|---|---|
| New (Default) | Lower rates, fewer deductions, standard deduction allowed | Salaried with low deductions |
| Old (Optional) | Higher rates, full deductions/exemptions | High deduction claimants |
Income Tax Slabs — New Regime
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 4,00,000 | Nil |
| 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% |
Income Tax Slabs — Old Regime (All Three Categories)
| Category | Income Slab (₹) | Tax Rate |
|---|---|---|
| Below 60 Years | 0 – 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% | |
| 5,00,001 – 10,00,000 | 20% | |
| Above 10,00,000 | 30% | |
| 60 – 80 Years (Senior Citizens) | 0 – 3,00,000 | Nil |
| 3,00,001 – 5,00,000 | 5% | |
| 5,00,001 – 10,00,000 | 20% | |
| Above 10,00,000 | 30% | |
| 80+ Years (Super Senior Citizens) | 0 – 5,00,000 | Nil |
| 5,00,001 – 10,00,000 | 20% | |
| Above 10,00,000 | 30% |
Rebates
Under Section 87A (reduces tax to zero if eligible).
| Regime | Max Income | Rebate |
|---|---|---|
| New | Up to 12,00,000 | ₹60,000 |
| Old | Up to 5,00,000 | ₹12,500 |
Deductions & Exemptions
Under New Tax Regime (Limited)
Most Chapter VI-A deductions are unavailable. Allowed items:
- Standard Deduction (Salary): ₹75,000
- NPS Employer Contribution (Sec 80CCD(2)): 10–14% of salary (government/private)
- Agniveer Corpus Fund: Full deduction
- Family Pension Deduction: ₹25,000 (or 1/3rd of pension, whichever is lower)
- Leave Encashment on retirement: Fully exempt for government employees
No HRA, LTA, or 80C is allowed in the new regime.
Under Old Tax Regime (Chapter VI-A & Others)
Full access to deductions up to specified limits. Common ones include:
| Section | Description | Max Limit (₹) |
|---|---|---|
| 80C | Life insurance, PPF, ELSS, tuition fees, home loan principal, EPF | 1,50,000 |
| 80CCC | Pension/annuity plans | 1,50,000 (within 80C limit) |
| 80CCD(1) | NPS contribution (self) | 1,50,000 (within 80C limit) |
| 80CCD(1B) | Additional NPS contribution (self) | 50,000 |
| 80CCD(2) | NPS employer contribution | 10–14% of salary |
| 80D | Health insurance premium & preventive check-up | 25,000 (self); 50,000 (parents/seniors) |
| 80DD | Maintenance of disabled dependent | 75,000 (40–79%); 1,25,000 (≥80%) |
| 80DDB | Medical treatment for specified diseases | 40,000 (≤60 yrs); 60,000 (60–79 yrs); 80,000 (≥80 yrs) |
| 80E | Education loan interest | Full interest (for 8 years) |
| 80EE | Home loan interest (first-time buyers) | 50,000 |
| 80EEA | Affordable housing loan interest | 1,50,000 |
| 80EEB | Electric vehicle loan interest | 1,50,000 |
| 80G | Donations to approved charities | 50–100% (cash limit ₹2,000) |
| 80GGA | Donations for scientific research/rural development | 100% |
| 80GGC | Contributions to political parties (non-cash) | Full |
| 80TTA / 80TTB | Savings account interest (non-seniors/seniors) | 10,000 / 50,000 |
| 80U | Disability (self) | 75,000 (40–79%); 1,25,000 (≥80%) |
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