Budget 2025 – New Income Tax Slab Rates FY 2025-26

Finance Minister announced changes in individual income tax slab rates in her Budget 2025. Let us look into the New Income Tax Slab Rates FY 2025-26.

What is the difference between Gross Income and Total Income or Taxable Income?

Before jumping into what are the Latest Income Tax Slab Rates for FY 2025-26 / AY 2026-27 after Budget 2025? Are there any changes to applicable tax rates for individuals? Let us see the details, first, understand the difference between Gross Income and Total Income.

Many of us have the confusion of understanding what is Gross Income and what is Total Income or Taxable Income. Also, we calculate the income tax on Gross Income. This is completely wrong. The income tax will be chargeable on the Total Income. Hence, it is very important to understand the difference.

Gross Total Income means total income under the heads of Salaries, Income from house property, Profits and gains of business or profession, Capital Gains, or income from other sources before making any deductions under Sections 80C to 80U.

Total Income or Taxable Income means Gross Total Income reduced by the amount permissible as deductions under Sec.80C to 80U.

Therefore your Total Income or Taxable Income will always be less than the Gross Total Income.

Budget 2025 – New Income Tax Slab Rates FY 2025-26

There will be two types of tax slabs.

  1. Old Tax Regime – For those who wish to claim IT Deductions and Exemptions.
  2. New Tax Regime – For those who DO NOT wish to claim IT Deductions and Exemptions.

Earlier, under the new tax regime, there were six income tax slab rates used to be there. But last year, it was reduced to five income tax slab rates. Do remember that the changes in income tax slab rates done last year apply only to the new tax regimes.

Also, earlier, the standard deduction available for the salaried class and the pensioners, including family pensioners, is available only for the old tax regime. Last year, it was made to be available under the new tax regime.

Note that there is no change in the old tax regime. However, the slabs changed under the new tax slabs. This means going forward, the old tax regime is not beneficial for many and this simple new tax regime will be beneficial. I think this is a good move by FM.

Let me now share with you the revised New Income Tax Slab Rates FY 2025-26.

Budget 2025 – New Income Tax Slab Rates For 2025-26 / AY 2026-27
(www.basunivesh.com)
Old Tax Regime
Income SlabIndividuals (Aged below 60 Yrs)Senior Citizens (Aged 60 Yrs and above but below 80 Yrs)Super Senior Citizens (Aged 80 Yrs and above)
Up to Rs.2,50,000NilNilNil
Rs.2,50,001 to Rs.3,00,0005%NilNil
Rs.3,00,001 to Rs.5,00,0005%5%Nil
Rs.5,00,001 to Rs.10,00,00020%20%20%
Rs.10,00,001 and above30%30%30%
New Tax Regime
Income SlabIncome Tax Rate
Up to Rs.4,00,000Nil
Rs.4,00,001 to Rs.8,00,0005% (with Tax Rebate Under Sec.87A up to Rs.12 Lakh)
Rs.8,00,001 to Rs.12,00,00010% (with Tax Rebate Under Sec.87A up to Rs.12 Lakh)
Rs.12,00,001 to Rs.16,00,00015%
Rs.16,00,001 to Rs.20,00,00020%
Rs.20,00,001 to Rs.24,00,00025%
Rs.24,00,001 and above30%
Latest Income Tax Slab Rates FY 2025-26 | AY 2026-27

Note that the standard deduction available for salaried is Rs.75,000. Also, the biggest change from Budget 2025 is revised limit under Sec.87A. Earlier it was up to Rs.7 lakh and now it is enhanced to Rs.12 lakh. Because of this, those who are earning less than or equal to Rs.12 lakh will have to pay zero tax if they adopt the new tax regime. However, there is no change in the old tax regime.

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10 thoughts on “Budget 2025 – New Income Tax Slab Rates FY 2025-26”

  1. ASHTAKALA SUBRAHMANYAM

    In FY 2024-25/AY 2025-26 under the new tax regime there were different slab rates for less than 60 yrs, senior citizens and super senior citizens.
    What are the rates applicable in budget FY 2025-26/AY2026-27

  2. Mahendra Prasad

    Standard deduction is one lakh for senior citizen on intrest. If senior citizen having total income less than 12 lakh per anum, including 2 lakh intrest. So he has to pay tds on intrest obove One lakh.

    1. Dear Mahendra,
      Yes, your understanding is correct. But as his tax liability is zero, he will get back this TDS amount once he file ITR.

  3. RAVI KIKAR SINHA

    I WELCOME THE NEW BUDGET 2025 OF GOVT. OF INDIA FOR INDIAN PEOPLE. IT HAS MANY GOOD THINGS. THE GOVT. IS DOING REMARKABLY WELL. WISH THE GOVT. GOODLUCK AND GOODYEAR.

  4. Tax exemption upto 12.75 lakhs should be applicable to all category employees
    including old optees. This decision is illegal and baseless. Why two systems for individual tax payers? Some should file case in Supreme court. ?

    1. Dear NRK,
      The idea to promote the new tax regime is to basically slowly abolish the old tax regime and retain only one tax regime (new tax regime).

  5. Basu
    There is no tax for the income upto 12 Lakhs means, Will there be any reduction to others. For instance a person with 30L income can get any less tax due to this new changes, Please clarify

    1. Dear Devan,
      As the slabs revised, obiviously there will be a reduction for the one who is having Rs.30 lakh income.

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