Finance Minister Nirmala Sitharaman, in Income Tax Slab 2025, announced major tax relief for taxpayers. It has good news for all of us. Let’s understand all about Latest income tax slabs announced this year.
What’s good news and New Income Tax Regime for Assessment Year (AY) 2025-26
Under the, New Income Tax Regime for Assessment Year (AY) 2025-26, no income tax will be payable on income up to Rs 12 lakh. Additionally, factoring in the standard deduction, the effective tax-free income limit extends to Rs 12.75 lakh.
New Income Tax Regime Slabs for AY 2025-26
| Income Range (Rs in Lakh) | Tax Rate (%) |
| Rs 0 – Rs 4 lakh | Nil |
| Rs 4 lakh – Rs 8 lakh | 5% |
| Rs 8 lakh – Rs 12 lakh | 10% |
| Rs 12 lakh – Rs 16 lakh | 15% |
| Rs 16 lakh – Rs 20 lakh | 20% |
| Rs 20 lakh – Rs 24 lakh | 25% |
| Above Rs 24 lakh | 30% |
Impact of the Revised Tax Slabs
- The revised tax slabs increase the tax-free income limit, providing relief to middle-class taxpayers.
- Furthermore, Lower tax rates across income brackets boost disposable income, encouraging higher spending and savings.
- Also, a simplified tax structure reduces complexities, making compliance easier for individuals.
How does it compare to previous years?
- Under the AY 2024-25 regime, income up to Rs 7 lakh was effectively tax-free due to a rebate of Rs 25,000 under Section 87A.
- In the AY 2025-26 regime, the tax-free limit has increased to Rs 12.75 lakh, providing greater relief.
Old Tax Regime for AY 2024-25
The old tax regime has not been revised and remains the same. It provides different exemption limits based on age.
For Individuals Below 60 Years
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 2,50,000 | 0% |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
For Senior Citizens (60-80 Years)
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 3,00,000 | 0% |
| 3,00,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
For Super Senior Citizens (80+ Years)
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 5,00,000 | 0% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Deductions Under the Old Tax Regime:
- Section 80C: Up to Rs 1.5 lakh for investments (PPF, ELSS, LIC, etc.)
- Section 80D: Up to Rs 25,000 for health insurance (Rs 50,000 for senior citizens)
- Section 80TTA: Up to Rs 10,000 deduction on savings account interest
- Section 80CCD(1B): Additional Rs 50,000 deduction for NPS contributions
- House Rent Allowance (HRA) & Leave Travel Allowance (LTA) exemptions
- Rebate under Section 87A: Ensures zero tax for taxable income up to Rs 5 lakh
Essential Tips to Choose Between the Old & New Tax Regime
- Taxpayers without business income can choose between the new and old tax regimes every financial year. However, it is important to note that from April 1, 2023, the new tax regime is the default. Taxpayers who prefer the old regime must explicitly opt for it.
- The new regime offers lower tax rates but fewer deductions and exemptions.
- In short, The old regime provides multiple deductions and rebates but has higher tax rates.
Key Highlights of Budget 2025 | Impact on Startups & Businesses
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