India follows a progressive tax system, where the tax rate increases as income rises. Income tax slabs are categorized based on income levels, and they may vary depending on factors like residential status, age, and the type of taxpayer. There are two tax regimes in India: the old tax regime and the new tax regime. Tax rates and slabs can change each financial year according to the government's budgetary announcements. This article provides a detailed overview of the income tax slabs for the Financial Year (FY) 2024-25 (Assessment Year 2025-26).
Key Budget Update for 2025: Income Tax Relief
As per the Budget 2025, the government has raised the Section 87A tax rebate limit from ₹7 lakh to ₹12 lakh. This significant change offers considerable tax relief for middle-income groups. Additionally, salaried individuals can claim a standard deduction of ₹75,000, making incomes up to ₹12.75 lakh tax-free.
New Tax Slab Structure for FY 2024-25 (Under New Regime)
The income tax slabs under the new tax regime for FY 2024-25 (Assessment Year 2025-26) are as follows:
| Income Range (in ₹) | Tax Rate |
| ₹0 – ₹4,00,000 | No Tax |
| ₹4,00,000 – ₹8,00,000 | 5% |
| ₹8,00,000 – ₹12,00,000 | 10% |
| ₹12,00,000 – ₹16,00,000 | 15% |
| ₹16,00,000 – ₹20,00,000 | 20% |
| ₹20,00,000 – ₹24,00,000 | 25% |
| ₹24,00,000 & above | 30% |
Extended Time for Filing Updated Returns (ITR-U)
Taxpayers will now have four years (instead of two) to update their Income Tax Returns. These changes will be effective starting 1 April 2025 for the FY 2025-26.
What is an Income Tax Slab?
Income tax slabs refer to the different income ranges that are taxed at varying rates. In India, these slabs are part of a progressive tax system, where individuals with higher incomes are taxed at higher rates. The system is designed to ensure fairness and equity in the taxation process.
The income tax slabs are revised annually as per the budgetary announcements. The taxpayer must file their Income Tax Return (ITR) by the due date, adhering to the applicable slab rates.
Old vs. New Tax Regime
There are two tax regimes in India: the old tax regime and the new tax regime. Taxpayers can choose between these regimes based on which one benefits them more.
Income Tax Slabs Under New Regime for FY 2025-26
For the financial year 2025-26 (Assessment Year 2026-27), the tax slabs under the new tax regime have been revised as follows:
| Income Range (in ₹) | Tax Rate |
| ₹0 – ₹4,00,000 | No Tax |
| ₹4,00,000 – ₹8,00,000 | 5% |
| ₹8,00,000 – ₹12,00,000 | 10% |
| ₹12,00,000 – ₹16,00,000 | 15% |
| ₹16,00,000 – ₹20,00,000 | 20% |
| ₹20,00,000 – ₹24,00,000 | 25% |
| ₹24,00,000 & above | 30% |
Increased Tax Rebate Limits in Budget 2025
Under the Budget 2025, the income tax rebate under Section 87A has been increased from ₹7 lakh to ₹12 lakh. This rebate provides significant tax relief for individuals with taxable income up to ₹12 lakh.
| Tax Rebate Limit | Old Tax Regime for FY 2024-25 | New Tax Regime for FY 2024-25 | New Tax Regime for FY 2025-26 |
| Up to ₹5 lakh | ₹5 lakh | ₹7 lakh | ₹12 lakh |
Additionally, a standard deduction of ₹75,000 is available, making a total of ₹12.75 lakh exempt from tax under the new tax regime.
Income Tax Slabs for FY 2024-25
Below is the comparison of income tax slabs for the old and new tax regimes for FY 2024-25 (Assessment Year 2025-26).
New Tax Regime for FY 2024-25
| Income Range (in ₹) | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,000 – ₹7,00,000 | 5% |
| ₹7,00,000 – ₹10,00,000 | 10% |
| ₹10,00,000 – ₹12,00,000 | 15% |
| ₹12,00,000 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Old Tax Regime for FY 2024-25
|
Income Range (in ₹) |
Tax Rate |
|
Up to ₹2,50,000 |
Nil |
|
₹2,50,000 – ₹5,00,000 |
5% |
|
₹5,00,000 – ₹10,00,000 |
20% |
|
Above ₹10,00,000 |
30% |
Comparison Between Old and New Tax Regimes
Old Tax Regime Features
- Higher Tax Rates: The old regime offers higher tax rates for different income ranges.
- Deductions and Exemptions: Under the old regime, taxpayers can avail of multiple deductions and exemptions such as Section 80C, House Rent Allowance (HRA), Leave Travel Allowance (LTA), and more.
- Suitable for High Deduction Claimants: This regime is ideal for individuals with high eligible deductions and exemptions.
New Tax Regime Features
- Lower Tax Rates: The new tax regime offers lower tax rates on higher incomes.
- No Deductions or Exemptions: In the new regime, most exemptions and deductions, including 80C, HRA, and LTA, are unavailable.
- Simplified Compliance: It eliminates the need for extensive documentation related to deductions.
- Higher Take-Home Salary: Suitable for individuals with minimal tax-saving investments.
Income Tax Slab Rates for FY 2024-25 (AY 2025-26) Based on Residential Status
Income Tax Rate for Resident Individuals and Hindu Undivided Families (HUF)
Old Tax Regime
| Income Slab (Rs.) | Individuals (Age < 60 years) | Resident Senior Citizens (≥60 but <80 years) | Resident Super Senior Citizens (80 years and above) |
| Up to 2,50,000 | Nil | Nil | Nil |
| 2,50,001 to 3,00,000 | 5% | Nil | Nil |
| 3,00,001 to 5,00,000 | 5% | 5% | Nil |
| 5,00,001 to 10,00,000 | 20% | 20% | 20% |
| Above 10,00,000 | 30% | 30% | 30% |
New Tax Regime (FY 2024-25)
| Total Income (Rs.) | Rate of Tax (AY 25-26) |
| 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% |
Revised Surcharge Under New Tax Regime
The surcharge rate has been lowered from 37% to 25% for taxpayers earning income above Rs. 5 crore.
| Net Taxable Income Limit | Surcharge Rate | Before Budget 2023 | After Budget 2023 |
| Less than ₹50 lakhs | Nil | Nil | Nil |
| ₹50 lakhs to ₹1 Crore | 10% | 10% | 10% |
| ₹1 Crore to ₹2 Crore | 15% | 15% | 15% |
| ₹2 Crore to ₹5 Crore | 25% | 25% | 25% |
| Above ₹5 Crore | 37% | 25% | 25% |
Income Tax Rates for Non-Resident Individuals
Existing Regime vs. New Regime
| Income Level (Rs.) | Existing Tax Regime | New Tax Regime |
| 0 – 2,50,000 | Nil | Nil |
| 2,50,001 – 5,00,000 | 5% | 5% |
| 5,00,001 – 10,00,000 | ₹12,500 + 20% on excess ₹5L | ₹20,000 + 10% on excess ₹7L |
| 10,00,001 and above | ₹1,12,500 + 30% on excess ₹10L | ₹50,000 + 15% on excess ₹10L |
| 12,00,001 – 15,00,000 | ₹80,000 + 20% on excess ₹12L | |
| 15,00,001 and above | ₹1,40,000 + 30% on excess ₹15L |
Note: Surcharge & cess also apply to non-residents under both regimes.
Income Tax Rates for AOP/BOI/Artificial Judicial Person
| Income (Rs.) | Old Tax Regime |
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Domestic Company Tax Rates
| Condition | Income Tax Rate (Excluding surcharge & cess) |
| Total Turnover or Gross Receipts in FY 2020-21 ≤ ₹400 crores | 25% |
| If opting for Section 115BA | 25% |
| If opting for Section 115BAA | 22% |
| If opting for Section 115BAB | 15% |
| Any other Domestic Company | 30% |
Foreign Company Tax Rates
Assessment Year 2024-25:
| Nature of Income | Tax Rate |
| Royalty or Technical Fees (approved agreements before April 1, 1976) | 50% |
| Any other income | 40% |
Assessment Year 2025-26:
| Nature of Income | Tax Rate |
| Royalty or Technical Fees (approved agreements before April 1, 1976) | 50% |
| Any other income | 35% |
Surcharge: If total income exceeds ₹1 crore, surcharge is applied as:
- 2% if income exceeds ₹1 crore but is ≤ ₹10 crore.
- 5% if income exceeds ₹10 crore.
Health & Education Cess: 4% on income tax + surcharge.
Minimum Alternate Tax (MAT): A foreign company must pay MAT at 15% of book profit if the normal tax liability is less than 15% of book profit.
Tax Slabs for Senior and Super Senior Citizens
Senior Citizens (New Regime)
| Income Slab (Rs.) | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Senior Citizens (Old Tax Regime)
| Income Slab (Rs.) | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Super Senior Citizens (Old Tax Regime)
| Income Slab (Rs.) | Tax Rate |
| Up to ₹5,00,000 | Nil |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Key Conditions for Choosing the Revised Tax Regime
- Deductions Not Allowed:
- Chapter VI-A deductions (except Sections 80CCD and 80JJAA)
- Interest on borrowed capital (Section 24(b))
- Depreciation under Section 32(1), 32AD, 33AB, etc.
- Losses: Losses from previous years (like house property loss) cannot be carried forward under the new regime.
- Simplification: The new tax regime does not offer exemptions or deductions but simplifies tax filing for many individuals by removing complicated tax-saving schemes.
Surcharge on Income Tax
- 10% if income exceeds ₹50 lakh but is ≤ ₹1 crore.
- 15% if income exceeds ₹1 crore but is ≤ ₹2 crore.
- 25% if income exceeds ₹2 crore but is ≤ ₹5 crore.
- 37% if income exceeds ₹5 crore (subject to reductions from Budget 2023).
Health & Education Cess: A 4% cess is applied on total tax and surcharge.
Exemptions/Deductions Under the New Tax Regime
Unavailable deductions:
- House Rent Allowance (Section 10(13A))
- Leave Travel Allowance (Section 10(5))
- Other Chapter VI-A deductions (e.g., Section 80C, 80D, etc.)
Available deductions:
- Employer’s contribution to NPS under Section 80CCD (2).
- Standard deduction for rental income (30%).
Benefits and Disadvantages of Choosing the Old vs. New Tax Regime
| Tax Regime | Benefits | Disadvantages |
| Old Tax Regime | Avail exemptions and deductions under various sections (e.g., HRA, LTA) | Complicated filing process and required investments for savings. |
| New Tax Regime | Lower tax rates and simplified filing process | Limited deductions, which may increase taxable income for some. |
Important Points for Opting for the New Tax Regime
- Tax Filing: The new regime simplifies tax filing, eliminating the need to track multiple deductions.
- Lower Rates: For incomes ≤ ₹7 lakh, the new regime offers lower rates with potential zero tax.
- Increased Liquidity: No need for tax-saving investments, leading to higher disposable income.
Drawbacks: The new regime forfeits tax-saving deductions, affecting long-term tax planning.
Conclusion
In conclusion, the Income Tax Slab Rates for FY 2024-25 (AY 2025-26) have seen notable changes, particularly in the new tax regime. The revised tax slabs aim to simplify the tax process by offering reduced rates and eliminating numerous deductions and exemptions. However, taxpayers should be mindful of the trade-offs when choosing between the old and new regimes. While the new tax regime offers lower tax rates and simplified filing, it removes many tax-saving opportunities, such as deductions for house rent and home loan interest.
Additionally, the surcharge rate on income above ₹5 crores has been reduced from 37% to 25%, benefiting high-income earners. The tax treatment for non-residents, AOPs, BOIs, domestic and foreign companies, and special conditions for senior citizens and super senior citizens are essential to understand for accurate tax planning.
When opting for the revised tax regime, it is important to consider the loss of deductions under Chapter VI-A, as well as the availability of certain exemptions like NPS contributions. The new regime may suit individuals who prefer simplicity, lower tax rates, and enhanced liquidity, especially those earning up to ₹7 lakhs who can avail of a full tax rebate. On the other hand, individuals with significant investments or those looking for long-term wealth creation might find the old tax regime more beneficial due to its allowance for multiple deductions.
The decision to switch between tax regimes should be made based on personal financial goals, income growth projections, and available investment strategies. Consulting with a tax advisor can help ensure the optimal choice is made, keeping in mind specific financial circumstances.
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Disclaimer: Aim of this article is to give basic knowledge about the topic to people who are not in touch with Indian tax norms. When anybody is dealing with these kinds of cases practically, he shall consider all relevant provisions of all applicable Laws like FEMA/Income Tax/RBI /Companies Act etc.
