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

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What is Income Tax Slab?

The taxpayers in India need to pay income tax based on the income tax slab they fall in. The Income tax slab consists of different ranges of income with different income tax rates. As income increases, the tax rates also increase. The tax slab in India was introduced to enable a fair tax system in the country. Based on these income tax slabs, the taxpayer has to finish ITR filing by the due date. The changes in the income tax slab are done as per the budget announcement. While the tax slabs under the old regime are divided into 3 categories depending on the age of individuals, the slabs under the new regime have no such classification.

The direct tax structure of India is also divided into the old and the new regime. The taxpayers can choose the one that is more beneficial while filing their ITR.

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Income Tax Slab Under New Regime for FY 2025-26 (AY 2026-27)

Given below is a table that shows the revised income tax slabs as per Budget 2025 under the new regime -

Note: The increased slab rates are only applicable under the new regime and will come into effect for ITR filing for FY 25-26 (AY 26-27).

Want to calculate your income tax for FY 25-26 (AY 26-27)? Calculate your tax liability using our Income Tax Calculator - FY 25-26 for free.

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Increased tax rebate Limits in Budget 2025

As per the Budget 2025, the income tax rebate limit has been increased to Rs.12 lakhs. In budget 2024, this limit was increased from Rs.5 lakhs to Rs. 7 lakhs under the new tax regime.

Note: You can also claim a standard deduction of Rs.75,000 over and above the limit of Rs.12 lakhs. This will make the total tax-free income Rs.12.75 lakhs.

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

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Comparing the Tax Rates of Old Tax Regime and New Tax Regime

Note: As per Budget 2025, the rebate u/s 87A has been increased to Rs.60,000, i.e., income upto Rs.12 lakh is exempt from tax. However, this rebate will only be applicable under the new regime and will come into effect for ITR filing for the year FY 2025-26 (AY 2026-27). For the revised tax slabs, please refer to the sections above.

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Old Tax Regime Vs. New Tax Regime

The Indian direct tax system is divided into the old regimes and the new regimes. Both regimes offer different exemptions and benefits -

New Tax Regime

The new regime offers lower tax rates for higher incomes than the old tax regime. It allows you to lower your tax liability subject to certain conditions and is optional.

So, If you choose to calculate your taxes using the new tax regime, most of the deductions and exemptions available under the Income Tax Act 1961 would not be available to you.

However, with the Budget 2023 Budget 2024 and Budget 2025, the government offered a few key changes in the new tax regime to make it more attractive:-

Old Tax Regime

The old tax regime in India refers to the system of income tax calculation and slabs that existed before the introduction of the new tax regime. In the old tax regime, individuals have the option to claim various tax deductions and exemptions to reduce their taxable income. The Old Tax Regime offers more than 70 deductions and exemptions to claims like Section 80C, HRA, LTA, and more. This regime is also called the existing tax regime. There is no change in old tax regime slab rate.

Note: The basic exemption limit for individuals above the age of 60 years and below 80 years under the old tax regime is Rs.3,00,000.

The basic exemption limit for individuals above the age of 80 years under the new tax regime is Rs.5,00,000.

Old Tax Regime Features

Higher Tax Rates:

• Tax slabs have higher rates for various income ranges.

Deductions and Exemptions:

• Allows multiple deductions such as:
  • Section 80C (₹1.5 lakh for investments like ELSS, PPF, etc.)
  • Section 80D (Medical insurance premium)
  • Standard deduction (₹50,000 for salaried individuals)
  • House Rent Allowance (HRA) and Leave Travel Allowance (LTA)
• Exemptions for allowances like transport allowance and food coupons. Suitable for those with high eligible deductions and exemptions.

New Tax Regime Features

Lower Tax Rates:

• Offers reduced tax rates across various slabs:

  New Regime Slabs (FY 2024-25)		New Regime Slabs (FY 2025-26)
  0 to 3 lakhs	Nil	0 to 4 lakhs	Nil
  3 to 7 lakhs	5%	4 to 8 lakhs	5%
  7 to 10 lakhs	10%	8 to 12 lakhs	10%
  10 to 12 lakhs	15%	12 to 16 lakhs	15%
  12 to 15 lakhs	20%	16 to 20 lakhs	20%
  Above 15 lakhs	30%	20 to 24 lakhs	25%
  		Above 24 lakhs	30%

No Deductions or Exemptions:

• Most exemptions and deductions, including 80C, HRA, and LTA, are not available.
• Standard deduction is allowed (₹75,000, effective from Budget 2024).

Simplified Compliance:

• No need to maintain extensive documentation for exemptions or deductions.

Higher Take-Home Salary:

• Beneficial for individuals who do not have significant tax-saving investments.

Suitable for Certain Taxpayers:

• Ideal for those with fewer or no investments and deductions.

Choosing Between Old and New Regime:

• Taxpayers can select the regime that benefits them the most.
• Old Regime suits those with substantial investments/deductions.
• New Regime is better for those preferring simplicity or with minimal tax-saving options.

You can also calculate your tax liability under both regimes using the Old vs. New tax slab regime calculator and select the best one according to your needs.

If you are confused about which tax regime suits you best or find ITR filing complicated, you can get assistance from our tax experts and complete your income tax return filing with the help of an online CA Book an online CA now!

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Income Tax Slab Rates for FY 2024-25(AY 2025-26) Based on Residential Status

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What Is Surcharge Amount Under Revised New Tax Regime?

Under the revised new tax regime, the surcharge rate has been reduced from 37% to 25% for taxpayers earning income more than Rs 5 crores.

A surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits

Income Tax Rate for Non-Resident Individual

Income Tax Rate for AOP/BOI/Artificial Judicial Person

Tax Slabs for Domestic Company

Note:

• A Company shall be liable to pay Minimum Alternate Tax (MAT) at 15% of book profit (plus surcharge and Health and Education cess as applicable) where the normal tax liability of the Company is less than 15% of book profit.
• A Company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange, MAT shall be payable at 9% (plus cess and surcharge as applicable)
• A Company opting for special rate taxation under Section 115BAA and 115BAB are exempt from paying MAT.
• The Companies opting for special rate of taxation u/s 115BAA or 115BAB will not be allowed certain deductions like section 80IA, 80IAB, 80IAC, 80IB and so on, except deduction u/s 80JJAA and 80M.

Income Tax Rate for a Foreign Company

Assessment Year 2024-25

Assessment Year 2025-26

Add:

(a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:

• (i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
• (ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

(b) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Minimum Alternate Tax (MAT)

A foreign company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of 'book profit'. In such a case the 'book profit' is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such 'book profit'.

However, the provisions of MAT do not apply in case of foreign companies if it does not have permanent establishment (PE) in India or opts for presumptive taxation scheme of Section 44B, Section 44BB, Section 44BBA or Section 44BBB.

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Senior and Super Senior Citizens Income Tax Slabs

Income Tax Slab for Senior and Super Senior Citizen (New Tax Regime)

• Income tax exemption limit is up to Rs.3 lakh.
• Surcharge is applicable if total income is more than Rs.50 lakh and up to Rs.1 crore: 10% of income tax.
• Surcharge is applicable if total income exceeds Rs.1 crore: 15% of income tax.

Income Tax Slab for Senior Citizens (Old Tax Regime)

Income Tax Slab for Super Senior Citizens (Old Tax Regime)

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Conditions for Choosing the Revised Tax Regime

For the assessment year 2024-25, individuals and Hindu Undivided Families (HUFs) must pay taxes under the new tax regime unless they opt for the old regime while filing their income tax returns before the due date. Under the new tax regime, the total income is calculated based on the following conditions:

Deductions and Exemptions Not Allowed:

1. Chapter VI-A Deductions: All deductions under Chapter VI-A, except those under Sections 80CCD and 80JJAA, are disallowed.
2. Section 35/35AD/35CCC: Deductions specified under these sections are not permitted.
3. Clause (iia) of Section 57: This deduction is excluded.
4. Section 24(b): Interest on borrowed capital deduction is not allowed.
5. Specific Clauses of Section 10, 10AA, and 16: Exemptions under clauses (5), (13A), (14), (17), and (32) are not applicable.
6. Depreciation and Related Deductions: Deductions under Sections 32(1), 32AD, 33AB, and 33ABA are not allowed.

Other Conditions for Income Calculation:

1. Losses from previous assessment years arising from disallowed deductions or house property losses cannot be offset.
2. No exemptions or deductions related to perquisites or allowances are considered.
3. Additional depreciation under clause (iia) of Section 32 cannot be claimed.

The new regime simplifies tax calculations by removing several deductions and exemptions but requires careful consideration to ensure compliance.

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Surcharge on Income Tax

In the event that an individual's income exceeds a certain threshold, additional taxes are levied on top of the existing tax rates. This constitutes an extra tax burden primarily targeted at high-income earners.

The surcharge rates are structured as follows:

• 10% of Income tax if total income is greater than Rs.50 lakh but less than Rs.1 crore.
• 15% of Income tax if total income is greater than Rs.1 crore but less than Rs.2 crore.
• 25% of Income tax if total income is greater than Rs.2 crore but less than Rs.5 crore.
• 37% of Income tax if total income exceeds Rs.5 crore.

It's worth noting that in Budget 2023, the highest surcharge rate of 37% was reduced to 25% under the new tax regime, effective from 1st April 2023.

However, certain income sources are exempted from the highest surcharge rates of 25% or 37%. These include income from dividends and capital gains taxable under 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). For such incomes, the highest surcharge rate on the tax payable is capped at 15%.

Additionally, the surcharge rate for an Association of Persons (AOP) consisting entirely of companies is also limited to 15%.

Furthermore, an additional Health and Education cess at the rate of 4% is applied to the income tax liability, contributing to government funds designated for healthcare and educational initiatives.

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What are the Exemptions/Deductions Unavailable Under the New Tax Regime?

The 2020 budget has removed approximately 70 of the 100 exemptions available under the new regime. The following exemptions and deductions are some of the most important ones that would not be available if the new tax regime slab is chosen for tax calculation –

1. House Rent Allowance under Section 10 (13A)
2. Leave Travel Allowance under Section 10(5)
3. Allowances under Section 10(14)
4. Food coupons and other tax-free allowances and perquisites
5. Deductions under Chapter VI A of the Income Tax Act like Section 80C, 80D, 80TTA, etc.
6. Deduction for home loan interest paid for self-owned house property under Sections 24 (b) and Section 80EEA.

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What Exemptions/Deductions are Available Under the New Tax Regime?

The following deductions and exemptions would be available under the new tax regime –

1. Employer’s contribution to the NPS for up to 10% of your salary under Section 80CCD (2) [ 14% in case of Central Govt employee]
2. Standard deduction of 30% of net rental income if house property is let out.
3. Home loan interest paid can be deducted from the rental income from the house property. However, loss from the House Property head can not be set off from any other head of income.
4. Transport allowance exemption will be available to Divyang employees to meet the day-to-day travel expenses from the workplace to home.
5. Conveyance allowance will be allowed to meet the expenditure on the conveyance to perform an official duty.
6. Allowances granted will be allowed to meet the cost of traveling on tour or on transfer to the employees.
7. Daily allowance granted for day-to-day ordinary expenses in case of absence from his / her normal place of duty.

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What are the Benefits and Disadvantages of Opting for the Old Tax Regime/the New Tax Regime?

The various benefits and disadvantages of old and new tax regimes include

Important Points to Note if you are Opting for the New Tax Regime

• Simpler Tax Filing: The new regime eliminates most deductions and exemptions, making tax filing a much simpler process. This can be ideal for individuals who find the old regime complicated and time-consuming.
• Lower Tax Rates: In many cases, the new regime offers lower tax rates as compared to the old regime, especially for individuals with incomes up to Rs. 7 lakhs. This can lead to increased disposable income.
• Tax Rebate: Individuals with income up to Rs. 7 lakhs are eligible for a complete tax rebate under the new regime, effectively paying zero tax.
• Increased Liquidity: By eliminating the need for tax-saving investments, the new regime can free up your disposable income for other financial goals.

Drawbacks:

• Limited Deductions and Exemptions: You forego several valuable deductions and exemptions like HRA, LTA, educational expenses, medical insurance, etc., potentially increasing your taxable income.
• No Planning Flexibility: Without deductions, you lose the ability to lower your tax liability through investments and expenses strategically.
• Higher Tax Rates for High Earners: For individuals with incomes exceeding Rs. 10 lakhs, the new regime's tax rates can be higher than the old regime, especially with surcharges added for income above Rs. 5 crores.
• Limited Choice for Long-Term Investors: If you rely on tax-saving instruments for long-term wealth creation, the new regime may not be optimal as you miss out on their benefits.

Additional Points:

• You can switch between the new and old regimes every year at the time of filing your tax return.
• Carefully compare your tax liability under both regimes before making a decision. Tools like tax calculators can help with this.
• Consider your future income growth and investment plans when choosing a regime.
• Consult a tax advisor for personalized guidance based on your specific financial situation.

How Can You Calculate Income Tax Liability Under the Old Tax Regime?

You can calculate your income tax liability under the old tax regime for FY 2024-25 using Tax2win’s Income Tax Calculator.

• Step 1. Visit Tax2win’s homepage.
• Step 2. From the top menu select Tools > Income Tax Calculator.
• Step 3. On the next page, enter the details like your name, email ID, date of birth and profession and click on next.
• Step 4. Enter the details of your income from different income sources.
• Step 5. Enter the details of other income like income from FD interest, savings account interest and other income. Now, click on next.
• Step 6. Enter the details of investment deductions like section 80C, 80D, 80E and other deductions. Now click on calculate.
• Step 7. On the next page, you can view your tax liability considering all the deductions as per both old regime and the new regime.

If you are confused about which regime to choose, you can simply look at the old and the new regime tax liability comparison and select the one that is more beneficial for you.

Example on How to Calculate Income Tax from Income Tax Slabs?

Let's walk through how Pooja, a salaried individual with an annual income of Rs. 8,50,000, calculates her income tax. Pooja has deductions under section 80C amounting to Rs. 1,50,000.

Pooja starts by figuring out her gross taxable income. So, it's Rs. 8,50,000 (her total income) minus Rs. 1,50,000 (deductions), which equals Rs. 7,00,000.

Now, let's dive into the income tax slab. There are three tax slabs in India:

Up to Rs. 5,00,000: 0% tax
Rs. 5,00,001 to Rs. 10,00,000: 20% tax
Above Rs. 10,00,000: 30% tax

Since Pooja's income falls in the Rs. 5,00,001 to Rs. 10,00,000 range, her tax rate is 20%.

Calculating the tax amount involves taking the income in this slab (Rs. 7,00,000 - Rs. 5,00,000) and applying the tax rate (20%). So, Pooja's tax amount within this slab is Rs. 40,000.

Now, surcharge. No worries for Pooja here because the surcharge applies to incomes exceeding Rs. 50 lakhs, and she's below that threshold.

Adding it all up, Pooja's total income tax for the financial year 2023-24 is Rs. 40,000. That's how she figures out her tax liability in a nutshell!

Tax2win’s Old vs New Tax Regime Calculator provides you with all the computations and a detailed comparison of how much your taxability will be as per both regimes (old/new) so that you can decide which one is suitable for you. However, filing ITR yourself can be complicated and time-consuming. Moreover, it is common to miss out on some important deductions available to you due to a lack of knowledge. Therefore, the best way to file an ITR is to hire an online CA who can not only help you file your ITR smoothly but also reduce your tax liability. Hire an Online CA Now!

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