New regime slab rates for FY 2025-26
The new regime has been the default since FY 2023-24. For FY 2025-26 the slabs are: income up to Rs. 4 lakh — nil; Rs. 4 lakh to Rs. 8 lakh — 5 percent; Rs. 8 lakh to Rs. 12 lakh — 10 percent; Rs. 12 lakh to Rs. 16 lakh — 15 percent; Rs. 16 lakh to Rs. 20 lakh — 20 percent; Rs. 20 lakh to Rs. 24 lakh — 25 percent; above Rs. 24 lakh — 30 percent. The Section 87A rebate makes income up to Rs. 12 lakh effectively tax-free under the new regime.
Old regime slab rates for FY 2025-26
For individuals below 60 years: income up to Rs. 2.5 lakh — nil; Rs. 2.5 lakh to Rs. 5 lakh — 5 percent; Rs. 5 lakh to Rs. 10 lakh — 20 percent; above Rs. 10 lakh — 30 percent. For senior citizens (60 to 79 years): basic exemption is Rs. 3 lakh. For super senior citizens (80 years and above): basic exemption is Rs. 5 lakh. The Section 87A rebate of up to Rs. 12,500 applies if income does not exceed Rs. 5 lakh.
Standard deduction under both regimes
Standard deduction for salaried individuals is Rs. 75,000 under the new regime (increased from Rs. 50,000 in Budget 2024). Under the old regime, the standard deduction remains Rs. 50,000. For pensioners, the standard deduction is the same as salaried individuals under both regimes.
Surcharge and cess
Health and Education Cess at 4 percent applies to the base tax under both regimes. Surcharge applies on higher incomes: 10 percent if income exceeds Rs. 50 lakh, 15 percent above Rs. 1 crore, 25 percent above Rs. 2 crore (capped at 25 percent under the new regime; 37 percent on non-special income under the old regime above Rs. 5 crore). Surcharge is computed on the base tax before adding cess.
Key deductions only available under old regime
Section 80C: up to Rs. 1.5 lakh for PPF, ELSS, life insurance, home loan principal, tuition fees. Section 80D: health insurance premiums up to Rs. 25,000 (Rs. 50,000 for senior citizens). Section 24B: home loan interest up to Rs. 2 lakh for self-occupied property. HRA exemption: calculated as the least of actual HRA received, 50 percent of salary in metro cities (40 percent others), and actual rent minus 10 percent of salary. NPS employer contribution under Section 80CCD(2) is available under both regimes.
A worked example: Rs. 15 lakh gross salary
Under the new regime: taxable income after Rs. 75,000 standard deduction = Rs. 14.25 lakh. Tax computed on slabs: approximately Rs. 1,42,500 before cess. After 4 percent cess: approximately Rs. 1,48,200. Under the old regime with Rs. 50,000 standard deduction and Rs. 1.5 lakh 80C and Rs. 25,000 80D: taxable income = Rs. 12.75 lakh. Tax on slabs: approximately Rs. 1,57,500. After cess: approximately Rs. 1,63,800. In this example the new regime saves approximately Rs. 15,600. Your actual numbers will differ based on deductions.
Which regime is default if you do nothing
The new regime is the default. If you do not explicitly choose the old regime when filing your ITR or informing your employer, the new regime applies. Salaried employees must inform their employer at the start of the year to have TDS computed under the old regime. If you miss this, you can still claim old regime benefits when filing your ITR, but you may need to pay additional tax or claim a refund depending on your actual liability.
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