Income Tax Rates for Individuals (under 60 years) for AY 2025-26
Old Tax Regime
Up to ₹2,50,000: No tax (Nil).
₹2,50,001 to ₹5,00,000: 5% tax on income above ₹2,50,000.
₹5,00,001 to ₹10,00,000: ₹12,500 + 20% tax on income above ₹5,00,000.
Above ₹10,00,000: ₹1,12,500 + 30% tax on income above ₹10,00,000.
New Tax Regime (Section 115BAC)
Up to ₹3,00,000: No tax (Nil).
₹3,00,001 to ₹7,00,000: 5% tax on income above ₹3,00,000.
₹7,00,001 to ₹10,00,000: ₹20,000 + 10% tax on income above ₹7,00,000.
₹10,00,001 to ₹12,00,000: ₹50,000 + 15% tax on income above ₹10,00,000.
₹12,00,001 to ₹15,00,000: ₹80,000 + 20% tax on income above ₹12,00,000.
Above ₹15,00,000: ₹1,40,000 + 30% tax on income above ₹15,00,000.
Key Notes:
Taxpayers opting for the New Tax Regime cannot claim certain exemptions and deductions available under the Old Tax Regime, such as HRA, 80C, 80D, 80TTB, etc.
A Health & Education Cess of 4% is applicable on the income tax amount plus any surcharge in both regimes.
Surcharge (applicable in both regimes):
Income > ₹50 lakh but ≤ ₹1 crore: 10%
Income > ₹1 crore but ≤ ₹2 crore: 15%
Income > ₹2 crore but ≤ ₹5 crore: 25%
Income > ₹5 crore: 37%
Partnership Firm/LLP
A partnership firm (including LLP) is taxable at a flat rate of 30%.
Income up to ₹50 lakh: ITR-4 (for firms), ITR-5 (for LLPs).
Income above ₹50 lakh: ITR-5 (for both firms and LLPs).
AOP/BOI/AJP
Tax rates for Associations of Persons (AOP), Body of Individuals (BOI), or Artificial Judicial Person (AJP) follow the Old Tax Regime or the New Tax Regime (Section 115BAC) as per their choice.
This breakdown should help you understand the tax slabs and options for the current assessment year.
Deductions and Exemptions Comparison
Old Tax Regime
The Old Tax Regime allows a wide range of deductions and exemptions, making it potentially more beneficial for individuals with significant eligible investments or expenses.
Here are some key deductions/exemptions typically available (though specifics can vary based on individual circumstances and updates):
Section 80C: Up to ₹1.5 lakh for investments in PPF, ELSS, life insurance premiums, NSC, tax-saving FDs, etc.
Section 80D: Up to ₹25,000 for health insurance premiums for self/family (₹50,000 for senior citizens) and an additional ₹5,000 for preventive health checkups.
Section 80TTB: Up to ₹50,000 for interest income from savings accounts, fixed deposits, or post office schemes for senior citizens.
HRA (House Rent Allowance): Exemption on HRA received, subject to conditions like rent paid and salary, if living in a rented accommodation.
Section 80E: Interest on education loans for higher studies (deduction for up to 8 years).
Section 80G: Donations to specified charitable institutions or funds.
Standard Deduction: ₹50,000 for salaried individuals and pensioners.
Interest on Home Loan: Deduction on interest paid on home loans (up to ₹2 lakh for self-occupied property under Section 24).
Other Sections: Deductions under 80CCD(1B) for NPS contributions (up to ₹50,000), 80DD for disability, 80U for persons with disabilities, etc.
These deductions can significantly reduce taxable income, making the Old Tax Regime attractive for those who can maximize them.
New Tax Regime (Section 115BAC)
The New Tax Regime, introduced as a simpler option, removes most deductions and exemptions to offer lower tax rates. Here’s what’s not allowed if you opt for it:
No deductions under Section 80C, 80D, 80TTB, 80E, 80G, or most other 80-series deductions.
No exemption for HRA (House Rent Allowance).
No standard deduction of ₹50,000 for salaried individuals or pensioners.
No deduction for interest on home loans (under Section 24) for self-occupied or let-out properties.
No exemptions for other allowances like LTA (Leave Travel Allowance), professional tax, or special allowances.
However, the New Tax Regime does allow a few limited deductions/exemptions:
Standard Deduction: ₹50,000 for salaried individuals (introduced in the New Regime from FY 2023-24 onwards).
Deduction for Family Pension: Up to ₹15,000 for pensioners.
Employer’s Contribution to NPS: Up to 10% of salary (under Section 80CCD(2)).
Interest on Home Loan for Let-Out Property: Deduction under Section 24(b) for properties given on rent (but not for self-occupied properties).
Key Differences
Flexibility: The Old Tax Regime offers more flexibility with a variety of deductions/exemptions, but it requires planning and investment to utilize them fully. The New Tax Regime is simpler with fewer options but lower tax rates, appealing if you don’t have many deductible expenses or investments.
Tax Burden: If you have significant deductions (e.g., ₹1-2 lakh or more from 80C, HRA, home loan interest), the Old Regime might result in lower tax liability. If your deductions are minimal, the New Regime’s lower rates (e.g., 5-30% vs. 5-30% in Old, but with higher thresholds) could be better.
Complexity: The Old Regime is more complex due to the need to track and claim various deductions, while the New Regime is straightforward with fewer variables.
Which Regime to Choose?
Opt for Old Tax Regime if you have substantial investments, rent payments, or other deductible expenses that can lower your taxable income significantly.
Opt for New Tax Regime if you have minimal or no deductions/exemptions to claim, prefer simplicity, or fall into the lower income slabs where the new rates are more advantageous (e.g., incomes up to ₹7,00,000 or ₹10,00,000).
Additional Considerations
The choice is optional for individuals (you can switch between regimes each year, except for businesses), but once a business opts for the New Regime, it’s generally locked in.
The 4% Health & Education Cess and surcharge rules apply to both regimes.
For partnership firms/LLPs or AOP/BOI/AJP, the tax rates are fixed or optional as per the Old/New Regime, but deductions follow similar principles.
If you’d like, I can help analyze a specific income scenario to determine which regime might save you more tax or provide more details on any particular deduction. What’s your situation—salaried, self-employed, or something else?
If you have specific questions about which regime might be better for your situation or need help interpreting any part, feel free to ask!
Credits:Grok 3(beta)
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