Income Tax Slabs and Rates in Budget 2025: As anticipated, Finance Minister Nirmala Sitharaman announced significant tax relaxations in the first full Budget of the Modi 3.0 government. Income up to Rs 12 lakh, excluding capital gains, is now tax-free. Here are the updated income tax slabs and rates for the financial year 2025-26 under the new tax regime for those earning above Rs 12 lakh.
These tax relaxations are expected to boost consumption in the economy. Check out the new income tax rates and slabs for FY 2025-26.
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Income Tax Slabs for FY 2025-26:
- Income up to Rs 4,00,000: Nil
- Income from Rs 4,00,001 to Rs 8,00,000: 5%
- Income from Rs 8,00,001 to Rs 12,00,000: 10%
- Income from Rs 12,00,001 to Rs 16,00,000: 15%
- Income from Rs 16,00,001 to Rs 20,00,000: 20%
- Income from Rs 20,00,001 to Rs 24,00,000: 25%
- Income above Rs 24,00,000: 30%
Importantly, individuals earning above Rs 12 lakh will not be eligible for the rebate under Section 87A. However, those earning up to Rs 12 lakh in FY 2025-26 will pay no tax due to the rebate. Additionally, those earning up to Rs 13 lakh can save on income tax, as the Rs 12 lakh limit includes a standard deduction of Rs 75,000, along with a marginal relief of around Rs 30,000.
Income Tax Exemption Limits:
- 2005: ₹1 lakh
- 2012: ₹2 lakhs
- 2014: ₹2.5 lakhs
- 2019: ₹5 lakhs
- 2023: ₹7 lakhs
- 2025: ₹12 lakhs
The old tax regime remains unchanged. Below are the current tax slabs applicable for FY 2024-25 under the old tax regime, which allows taxpayers to claim various exemptions and deductions:
Current Tax Slabs Under the Old Tax Regime (Applicable FY 2024-25):
- Income up to Rs 2,50,000: Nil
- Income from Rs 2,50,001 to Rs 7,00,000: 5%
- Income from Rs 7,00,001 to Rs 10,00,000: 10%
- Income from Rs 10,00,001 to Rs 12,00,000: 15%
- Income from Rs 12,00,001 to Rs 15,00,000: 20%
- Income above Rs 15,00,000: 30%
For senior citizens (aged 60-80 years): Basic exemption limit is Rs 3,00,000.
For super senior citizens (above 80 years): Basic exemption limit is Rs 5,00,000.
The Old Tax Regime offers deductions under various sections, including:
- Section 80C: Up to Rs 1,50,000 for investments like PPF, ELSS, and LIC premiums.
- Section 80D: Health insurance premiums.
- Section 24(b): Interest on home loan up to Rs 2,00,000.
- Other exemptions like HRA and LTA.

Tax Slabs Under the New Tax Regime (Applicable FY 2024-25)
Introduced in Budget 2020, the New Tax Regime offers lower tax rates but fewer exemptions and deductions. Here are the current tax slabs (before Budget 2025):
- Income up to Rs 3,00,000: Nil
- Income from Rs 3,00,001 to Rs 7,00,000: 5% (tax rebate under Section 87A up to Rs 7 lakh)
- Income from Rs 7,00,001 to Rs 10,00,000: 10%
- Income from Rs 10,00,001 to Rs 12,00,000: 15%
- Income from Rs 12,00,001 to Rs 15,00,000: 20%
- Income above Rs 15,00,000: 30%
The New Tax Regime was made the default tax regime in Budget 2024. Under this regime, taxpayers can benefit from lower tax rates, but they must give up popular exemptions such as HRA, LTA, and deductions under Sections 80C, 80D, and others.
However, taxpayers can still avail of a standard deduction. In the Budget 2024-25, the standard deduction limit for salaried employees was increased to Rs 75,000. For family pensioners, the limit was raised to Rs 25,000.
Choosing between the New and Old Tax Regime depends on an individual’s financial situation. The New Tax Regime is ideal for those seeking simplicity with minimal investments, while the Old Tax Regime benefits taxpayers who utilize various exemptions and deductions.
Finance Minister Nirmala Sitharaman announced a comprehensive review of the Income Tax Act in the 2024-25 Budget. Following this, a review committee was formed, led by Chief Commissioner of Income Tax, V K Gupta.
Source: News18
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